Gold regains strong momentum and approaches a two week high.
The gold price (XAUUSD) attracts new buyers after the previous day’s range bound price action and moves back closer to its highest level since June 21 during the Asian session on Friday.
September Fed rate drop bets weaken the USD and strengthen the metal.
Firming forecasts that the Federal Reserve (Fed) would cut interest rates in September. Aided by recent lower US macro data, drives the US Dollar (USD) to almost a three week low and is seen benefitting the non-yielding yellow metal. Aside from that, continuous geopolitical tensions. As well as political instability in the United States and Europe, appear to be another factor pushing flows to the safe-haven asset.
The risk-on atmosphere could limit gains as traders prepare for the critical US jobs report.
However, the current risk-on atmosphere, as evidenced by the recent bullish run across global equity markets, may limit any runaway gain in the XAUUSD. Traders may also refrain from putting aggressive bets and instead wait for the release of the US monthly employment data. The well known Nonfarm Payrolls (NFP) report will shape market expectations for the Fed’s future policy choices. This, in turn, will boost near-term USD demand and provide a fresh directional impetus to the precious metal. Which continues on track to achieve gains for the second consecutive year. week.
Daily Market Movers: Gold price bulls maintain grip despite dovish Fed views and USD selling.
Expectations of an immediate start to the Federal Reserve’s rate-cutting cycle. In September weighed on the US Dollar for the fourth straight day on Friday, lending support to the non-yielding gold price.
This week’s poorer US macroeconomic announcements raised market bets. Pointing to indicators of labor market weakness and an economic slowdown at the conclusion of the second quarter.
However, hawkish comments from a number of influential Fed officials. As well as the minutes of the June FOMC policy meeting, indicate that policymakers were still unsure about lowering lending rates.
Furthermore, the underlying bullishness Sentiment in the global equity markets prevents traders from placing new optimistic wagers on the safe-haven precious metal ahead of carefully monitored US jobs statistics.
The well-known Nonfarm Payrolls data is set to be released later during the North American session. And it is likely to indicate that the US economy added 190K jobs in June, up from 272K the previous month.
Meanwhile, the jobless rate is expected to remain at 4%. While average hourly earnings growth may slow to 3.9% per year, compared to a 4.1% gain in May.
The critical data will play a vital role in determining market expectations about the Fed’s future policy actions. Which, in turn, will boost USD demand supply new directional momentum to the XAUUSD.
