Gold trade within a similar range since the beginning of the current week.
During the Asian session on Thursday, the gold price (XAUUSD) remained above the psychological barrier of $2,500, close to the all-time high reached earlier this week. Data released on Wednesday showed that US job growth in the year to March was much lower than previously expected. Furthermore, the July FOMC meeting minutes revealed that numerous officials were inclined toward immediate interest Rate reduction. This reiterated bets on the Fed’s policy easing cycle beginning in September, which hammered the US Dollar (USD) to a new year-to-date low on Wednesday and continues to operate as a tailwind for the non-yielding gold.
Fed rate cut bets, combined with geopolitical worries, should help limit any significant corrective decline.
Investors, on the other hand, want greater clarification if the weak US labor market offers a case for a deeper interest rate decrease next month. This adds weight to Fed Chair Jerome Powell’s remarks at the Jackson Hole Symposium, which will have a significant impact on the near-term USD price dynamics and provide a new directional push to the gold price. Meanwhile, the pervasive risk-on environment restricts the safe-haven XAUUSD. However, the lack of movement in a truce accord between Israel and Hamas should work together to limit the negative consequences. Traders are now looking to the flash global PMIs, which, coupled with the US macro data, could provide short-term possibilities.
Daily Market Movers: Gold price is hampered by positive market sentiment, and Fed’s dovish forecast to limit the fall.
The US Dollar fell to a new year-to-date low on Wednesday in response to news showing that the labor market was not as strong as expected, assisting the Gold price in reversing an intraday drop to below $2,500 levels.
The preliminary annual benchmark review of employment data provided by the US Bureau of Labor Statistics revealed that US firms added 818,000 fewer jobs than reported during the year through March.
Furthermore, the minutes from the July 30-31 FOMC The conference revealed that the clear majority of officials supported the argument for a rate drop in September, with several policymakers moving toward rapid action.
The markets are now pricing in a 38% chance of a 50 basis point rate decrease next month, up from 29% the day before, and approximately 100 basis points of easing by the end of the year, which supports the non-yielding metal.
Meanwhile, a peace agreement between Israel and Hamas remains elusive, raising the likelihood of a broader Middle East conflict and adding support to the XAUUSD.
Traders now look forward to the US economic docket.
Traders now look forward to the US economic docket, which includes the release of the Weekly Initial Jobless Claims and Existing Home Sales data. Look for short-term possibilities later in the North American session.
The market will, however, remain focused on Fed Chair Jerome Powell’s speech on Friday to see if the substantially lower-than-expected US employment growth makes a solid case for a greater interest rate decrease in September.
