The continued strength of the US dollar and the increase in bond yields contributed to the increase in gold sales. The dollar is still the strongest, as the results of the latest US economic data confirm that the US Central Bank’s strict policy did not push the economy into recession as previously expected. As a result, gold prices, On the future of US interest rate hikes.
What is Expected for the Price of Gold?
In this regard, Jim Wyckoff, chief analyst at Kitco Metals, said in a note to Reuters “There is a belief that US interest rates will be higher for a much longer period, which was the bearish element for precious metals markets and gold prices may fall below $1,800 in the near term.”
“Trends in currency markets tend to be stronger and longer-term. The US dollar’s rise may not end anytime soon, which will put pressure on the gold market,” he added.
Since XAU/USD rose above the key level of $2,000 an ounce in early May, gold prices have fallen more than 11%, or $230, under pressure from a sharp rise in benchmark US Treasury yields, making gold unprofitable.
“Dip buying (in gold) by central banks is clearly absent now,” said Tai Wong, an independent metals trader in New York.
On the economic side, US job openings rose unexpectedly in August, another sign that the US job market remains strong despite rising interest rates – and perhaps too strong for the Fed's inflation warriors.
In this regard, the US Department of Labor said yesterday that American employers registered 9.6 million job opportunities in August, up from 8.9 million in July, which is the first increase in three months. Economists had expected only 8.9 million more job openings. The number of layoffs and people leaving their jobs — a sign of confidence in their prospects — was essentially unchanged since July.
For its part, the Federal Reserve (the US central bank) wants to see a calm labor market in the United States, which reduces pressure on companies to increase wages, which could lead to higher prices. The central bank has raised the benchmark interest rate 11 times since March 2022 to combat inflation. For his part, Federal Reserve Chairman Jerome Powell expressed his hope that US employment will moderate in the least painful way possible - with fewer vacancies and less job-hopping rather than layoffs.
Gold Technical Outlook
- So far, the general trend of the gold price is Below expectations for US jobs numbers this week.
- On the other hand, over the same time period, if the US job numbers come in stronger than all expectations, it is not excluded that the price of gold (XAU/USD) will collapse to the next psychological support level of $1,800 per ounce.
I still prefer to buy gold from every falling level. Today, the dollar will react to the announcement of the ADP reading of the change in US non-agricultural jobs and the SIM reading for services, in addition to the statements of some US Federal Reserve Bank officials.
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