Gold price remained under moderate selling pressure for the second day in a row.
Following the release of stronger-than-expected employment data from the United States (US), the gold price (XAUUSD) plummeted more than 1.5% intraday and to a two-week low on Friday. The carefully anticipated US jobs report showed overall strength and pointed to a sturdy economy, prompting investors to reduce their bets on the Federal Reserve (Fed) cutting interest rates by 25 basis points (bps) in March 2024. This pushed US Treasury bond yields and the US Dollar (USD) higher, putting pressure on the commodities.
Geopolitical concerns may aid to limit more losses ahead of this week’s main data/event risks.
The selling tendency in the gold market has continued into the Asian session on Monday, despite a lack of follow-through amid geopolitical uncertainties. Traders appear to be wary of making strong wagers ahead of this week’s significant data and central bank event threats. The consumer inflation numbers for the United States are due on Tuesday, followed by the key FOMC decision on Wednesday. On Thursday, the Swiss National Bank (SNB), the Bank of England (BoE), and the European Central Bank (ECB) will all release policy updates.
The market’s focus will subsequently shift to the announcement of flash Eurozone PMI figures. , the United Kingdom, and the United States, which will provide new insight into the health of the global economy and add some substantial push to the Gold price. Nonetheless, the XAUUSD appears to have found acceptance below the $2,000 psychological level for the time being, with a possible Fed pivot preventing a deeper decline.
Daily Market Movers: The gold price continues to be dragged down by lower odds of a Fed rate cut in March 2024.
The benchmark 10-year US Treasury yield rose from a three-month low following positive US employment statistics, lifting the US Dollar and undermining the gold price on Friday.
According to the US NFP data, the economy added 199K new jobs in November, above expectations. In the prior month, readings of 180K and 150K increased.
Despite an increase in the Labor Force Participation Rate, the US Bureau of Labor Statistics (BLS) stated that the Unemployment Rate fell to 3.7% in November from 3.9% in October.
The statistics indicated underlying labor market strength, prompting traders to speculate that the Federal Reserve may not decrease interest rates until May 2024.
Iran-backed militias in Iraq and Syria targeted US forces with missiles and drones at least five more times on Friday for their support for Israel during the Gaza battle.
After being hit by 14 rockets earlier in the day, the US embassy in Iraq’s capital Baghdad was shelled on Friday, raising fears of a wider confrontation Middle Eastern.
Before making bold directional bets, traders are waiting for this week’s US consumer inflation statistics and the Fed’s interest rate estimates for next year.
On Thursday, the Swiss National Bank (SNB), the Bank of England (BoE), and the European Central Bank (ECB) will all meet to discuss monetary policy.
