Gold price fell, eroding some of the previous day’s significant upward rise.
The gold price (XAUUSD) struggles to profit on the previous day’s dramatic surge of more than 1%, caused by a further escalation of geopolitical tensions in the Middle East, and attracts new sellers on Wednesday.
Reduced bets on the Fed’s excessive rate reduction support the USD and weigh on the Gold (XAUUSD).
The US Dollar (USD) maintains its recovery gains over the previous two days, with hints of a continuing resilient The US labor market is weakening, and the Federal Reserve’s (Fed) chances of relaxing policy more aggressively are decreasing. This, in turn, is viewed as a significant element putting downward pressure on the non-yielding precious metal.
However, the prospect of a full-fledged conflict in the Middle East appears to have mitigated the negative for the gold price. The anxieties returned when Iran fired ballistic missiles at Israel on Tuesday, which continues to weigh on investors’ psyche and should boost the safe-haven precious metal. As a result, any future slide could be interpreted as a purchasing opportunity and is more likely to remain cushioned. Investors are now anticipating the release of the US ADP report on private-sector employment for short-term trade momentum.
Daily Market Movers: Gold price bulls turn cautious amid lower bets on more aggressive Fed policy lowering.
Iran launched a volley of ballistic missiles toward Israel on Tuesday in retaliation for the latter’s assault in Lebanon against the Iran-backed armed outfit Hezbollah, boosting demand for the safe-haven gold price.
Israeli Prime Minister Benjamin Netanyahu declared that Iran will pay for its missile attack, while Iran warned that any reprisal would result in massive destruction, heightening the prospect of a wider Middle Eastern confrontation.
According to the US Bureau of Labor Statistics’ (BLS) Job opportunities and Labor Turnover Survey (JOLTS), there were 8.04 million job opportunities in August, an unexpected increase.
Separately, the Institute of Supply Management (ISM) announced that its Manufacturing PMI stayed constant at 47.2 in September, indicating that business activity has contracted for the sixth consecutive month.
Investors are still weighing the possibility of another 50 basis point interest rate decrease by the US central bank in November, following Federal Reserve Chair Jerome Powell’s somewhat hawkish remarks on Monday.
Powell said he expects two more 25-basis-point rate cuts this year if the economy performs as predicted.
Powell said he expects two more 25-basis-point rate cuts this year if the economy performs as predicted, while the CME Group’s FedWatch Tool predicts a 35% possibility of a supersized rate decrease next month.
Atlanta Fed President Raphael Bostic stated on Tuesday that the US central bank should be open to examine additional significant rate reduction if the jobs market deteriorates, and the PCE statistics imply that disinflation remains on pace.
Traders are now looking to the US ADP report for a boost ahead of the crucial US NFP on Friday.
Market participants are now looking forward to the US ADP data, which is likely to reveal that private-sector firms gained 120K positions in September, compared to 99K the previous month, for short-term opportunities.
The attention, however, will remain on the carefully anticipated official monthly employment data, commonly known as the Nonfarm Payrolls (NFP) report, which should provide a new directional thrust.
