Gold fall for the second day in a row as investors diminish their expectations for aggressive Fed easing.
The gold price (XAUUSD) remained under selling pressure for the second day in a row on Monday, and it appears vulnerable to extending last week’s retracement decline from the $2,065 level, or a one-month high. Friday’s blockbuster US jobs report reiterated market views that the Federal Reserve (Fed) will maintain interest rates higher for longer, which continues to support rising US Treasury bond yields and strengthens the US Dollar (USD). It reached its highest level since December 11. This, in turn, is seen as a significant component undermining the non-yielding yellow metal.
Geopolitical uncertainties and China’s economic troubles may provide support for the safe-haven commodity.
Aside from that, the underlying bullish tone on global equity markets adds to the offered tone around the gold price. However, the prospect of future military action in the Middle East, as well as persisting concerns about a Chinese slowdown, strengthen the safe-haven XAUUSD, so bearish traders should exercise caution. Traders are now anticipating the release of the US ISM Services PMI, which, combined with US bond yields, USD pricing dynamics, and broader risk sentiment, should provide some support to the metal.
Daily Market Movers: Gold Price Adds to Post-NFP Losses as The dollar rises to a nearly two-month high.
The strong US employment data announced on Friday caused investors to lower their expectations. For the timing and pace of rate cuts by the Federal Reserve, which is expected to weigh on the gold price.
The headline NFP revealed that the US economy added 353K new jobs in January, about double the 180K expected. While the prior month’s number was revised up to 333K from 216K.
Other statistics revealed that the unemployment rate remained stable at 3.7%, and wage inflation. As measured by the change in average hourly earnings. Increased to 4.5% on a yearly basis, up from 4.1% expected.
The probability of a rate cut in March has dropped to around 15% from Over 65% last month. But the possibility of a 150-bps rate cut in 2024 has dropped to 25% from near certainty earlier.
The yield on the benchmark 10-year US government bond rose above 4.0% during Asian trading hours on Monday. Pushing the US Dollar to a new high since December.
According to a private study, business activity in China’s services sector has been expanding for 13 months in a row. Albeit growth was lower than predicted in January, raising concerns about a slowdown.
Israel’s Prime Minister Benjamin Netanyahu stated that the country will not cease the conflict until it has achieved all of its objectives.
Israel’s Prime Minister Benjamin Netanyahu stated that the country will not cease the conflict until it has achieved all of its objectives. While media reports indicate that Hamas is prepared to reject the A cease fire accord for Gaza has been offered in Paris.
According to US Central Command, forces launched a self-defense strike. Against a Houthi land assault cruise missile. As well as four anti-ship cruise missiles that were preparing to launch at Red Sea ships.
This, in turn, might provide a tailwind for the safe-haven precious metal. As traders await the release of the US ISM Services PMI for short term chances later in the early North American session on Monday.
