GOLD Analysis
Afternoon: Gold Holds Steady Amid Mixed Market Forces and Central Bank Moves
Highlights:
- Resilient US labor market: Higher job openings and robust ISM services data suggest inflationary pressures.
- Central bank gold purchases: PBoC’s consistent additions to reserves highlight gold's appeal as a safe-haven asset.
- Awaited policy guidance: Nonfarm payroll data and FOMC minutes remain pivotal for gold's direction.
Overview:
Gold prices remained largely unchanged at $2,650, caught between opposing market forces. On one hand, a stronger US dollar and rising Treasury yields exerted downward pressure on the yellow metal. On the other, geopolitical and economic uncertainties provided support. The resilience of the US labour market, demonstrated by a rise in job openings and stronger-than-expected ISM services data, highlighted persistent inflationary pressures. These developments tempered expectations of significant rate cuts by the Federal Reserve in the near term.
Meanwhile, uncertainty over tariff policies under President-elect Donald Trump, coupled with continued gold purchases by the PBoC (People's Bank of China) for the second consecutive month, added layers of complexity to gold's trajectory. Traders are now eyeing upcoming US jobs data, including the nonfarm payrolls report and FOMC minutes, for clearer policy signals.
Key Economic Indicators to Watch
- Euro Zone: German Retail Sales m/m, German Factory Orders m/m
- US Zone: ADP Non-Farm Employment Change, Unemployment Claims
Analysis and Strategy
- Short-Term Drivers:
Recent ISM services data revealed an uptick in both activity and prices, intensifying concerns about inflation and reducing the likelihood of aggressive rate cuts. Rising Treasury yields, a natural competitor to non-yielding assets like gold, have further pressured prices. However, gold has managed to retain its safe-haven allure amid uncertainties around Trump's tariff policies, bolstered by the PBoC's gold purchases.
- Central Bank Impact:
The PBoC's move to add gold to its reserves for the second consecutive month signals continued demand from institutional buyers. Such purchases are often viewed as a hedge against global uncertainties and dollar volatility, providing an underlying floor for gold prices.
- Labour Market Resilience:
A resilient US labour market, evidenced by higher job openings and a steady unemployment rate, reinforces the Fed's cautious stance. This dynamic creates a tug-of-war between expectations of monetary easing and inflation-driven tightening, keeping gold prices in a tight range.
Recommended Strategy
Action: Buy on dips near $2,642, targeting $2,660, with a stop-loss below $2,628.
Support and Resistance Levels:
