Gold prices rise for the second day in a row, reaching a one-week high on Monday.
The gold price (XAUUSD) saw a stunning intraday turnaround on Friday, rallying more than 1.3% from $1,810. Its lowest level since March 8 in the aftermath of the United States (US) monthly employment report. Meanwhile, the US Nonfarm Payrolls (NFP) data reinforced predictions on at least one more rate rise by the Federal Reserve (Fed) in 2023. And continued to weigh on the Fed. on the valuable metal.
Hawkish Fed predictions and higher US bond rates support the USD and limit metal gains.
However, additional details of the data indicated that wage growth remained moderate during the reported month. Eeasing inflationary fears and potentially allowing the Fed to modify its hawkish position. As a result, the US Dollar (USD) fell for the third consecutive day, prompting aggressive short covering around the Gold price. Allowing it to end a nine-day losing run.
Rising geopolitical tensions in the Middle East provide the safe haven Gold a big boost.
Furthermore, rising geopolitical concerns in the Middle East aided the XAUUSD in obtaining some follow through strength. On the opening day of a new week and climbing to a one-week high during the Asian session. The gold price, on the other hand, is struggling to capitalize on the advance over $1,855. As traders turn their attention to this week’s publication of the FOMC meeting minutes and the US consumer inflation numbers.
Gold price gains from rising global tensions.
Last Friday, the US NFP data indicated that the economy added 336K jobs in September. Which was far higher than expected, and the prior month’s estimate was also raised up to 227K from 187K.
Average hourly earnings increased by 0.2% during the reporting month. Matching a similar increase in August, and increased by 4.2% year on year through September, comparable to 4.3% the prior year.
Markets continue to price in at least one more rate rise by the Federal Reserve (Fed) in 2023. Which supports rising US bond rates and strengthens the US Dollar.
Geopolitical tensions spark a fresh wave of the global risk-aversion mood. Aiding the safe haven Gold price to get some follow through impetus and surge to above a one-week high on Monday.
On Sunday, Israel started airstrikes on Gaza and declared war on the Palestinian enclave of Gaza in response to an unprecedented offensive on Israeli communities by the Hamas terrorist group in Gaza.
The event increases the possibility of a larger Middle East conflict and increases demand for conventional safe-haven assets, which is expected to help the gold price.
Market players are now looking forward to the release of the FOMC meeting minutes and the most recent US consumer inflation statistics this week for new clues regarding the Fed’s potential rate-hike path.
