Gold trading with a negative bias for the second day in a row as the US dollar strengthens.
The gold price (XAUUSD) attracts new sellers after rising overnight from $2,641 and continues on the defensive heading into Thursday’s European session. The US Dollar (USD) extends its positive recovery move from the lowest level since July 2023 and advances to a three-week high amid reducing prospects of a more aggressive policy easing by the Federal Reserve (Fed). This, in turn, is viewed as a major factor hurting demand for the non-yielding yellow metal, albeit further escalation of tensions in the Middle East helps to limit the downside.
Geopolitical issues continue to provide a tailwind for the XAUUSD ahead of US data.
Iran launched over 200 ballistic missiles toward Israel on Tuesday, while the latter carried out a precise air assault and bombed central Beirut in Lebanon early Thursday morning. This enhances the possibility of a full-fledged war in the region, dampens investors’ demand for riskier assets, as evidenced by a generally softer tone in the equities markets, and serves as a tailwind for the safe-haven gold price. Thursday’s US economic docket may provide some impetus to the XAUUSD, but the attention will stay on the US Nonfarm Payrolls (NFP) report.
Daily Market Movers: Gold price bulls continue on the defensive despite broad-based USD rise.
The incoming improved US labor market figures and Federal Reserve Chair Jerome Powell’s rather hawkish remarks on Monday help the US Dollar extend its rebound from its lowest level since July 2023.
According to the US JOLTS Job Openings survey published on Tuesday, the number of available jobs unexpectedly increased by 329K from an upwardly revised 7.711 million the previous month to 8.040 million in August.
Furthermore, Automatic Data Processing (ADP) reported on Wednesday that private-sector firms gained 143K jobs in September, exceeding predictions of 120K and August’s revised figure of 103K.
This provided proof of a resilient US labor market and pushed investors to reconsider the possibility of further 50 basis points in interest rate cuts by the US central bank at its next monetary policy meeting in November.
Adding to this expectation that China’s huge stimulus efforts could spark a long-term resurgence in the world’s second-largest economy, the safe-haven gold price fell further on Thursday.
Geopolitical front, an Israeli strike on central Beirut, Lebanon, early Thursday follows Iran’s launch of more than 180 ballistic missiles at Israel.
On the geopolitical front, an Israeli strike on central Beirut, Lebanon, early Thursday follows Iran’s launch of more than 180 ballistic missiles at Israel on Tuesday, heightening the prospect of a full-fledged Middle East conflict.
The mixed underlying backdrop requires some caution before putting strong directional bets around the XAUUSD ahead of major US macro data, such as the regularly expected Nonfarm Payrolls report. .
Meanwhile, Thursday’s US economic calendar, which includes Initial Jobless Claims and ISM Services PMI, as well as speeches from prominent FOMC members, may provide short-term possibilities for the precious metal.
