- Gold is up 0.28%, boosted by soft US Dollar and shrugging off positive US job data.
- Friday's Nonfarm Payrolls data could influence the Fed's rate decision.
- Fed officials express optimism about the economy, hinting at cautious policy recalibration ahead.
Gold prices trended up on Tuesday during the North American session. XAU/USD rose 0.28% higher despite US Treasury yields gaining ground, though the yellow metal was underpinned by overall US Dollar weakness across the board. The XAU/USD trades at $2,644.
Bullion extended its gains as traders shrugged off upbeat US jobs data from the US Department of Labor. The number of job openings in the country increased sharply, indicating that the labor market remains solid.
Ahead this week, further US jobs data for November will be revealed. Positive prints on Thursday’s Initial Jobless Claims and Friday’s Nonfarm Payrolls could prevent the Federal Reserve (Fed) from cutting interest rates at the upcoming December meeting.
The San Francisco Fed's Mary Daly said the US economy is in a good place as inflation is headed to 2% and the labor market remains solid. She stated, "We have to continue to recalibrate policy [...] whether it will be in December or sometime later."
Fed Governor Adriana Kugler commented that the labor market is solid and that she sees the economy “in a good position after making significant progress in recent years toward our dual-mandate goals of maximum employment and stable prices.” However, she didn't provide any forward guidance regarding her posture for the latest 2024 meeting.
This week, the US economic docket will feature Fed speakers, including Chair Jerome Powell, the JOLTs Job Openings for October, S&P and ISM Services PMI surveys, and Nonfarm Payroll figures.
Daily digest market movers: Gold price shrugs off high US yields
- Gold prices advance even though US real yields climbed three and a half basis points to 1.966%.
- The US 10-year Treasury bond yield rose three basis points to 4.226%.
- The US Dollar Index is virtually unchanged at 106.33 on the day.
- The October JOLTS report revealed 7.74 million job vacancies, surpassing expectations of 7.48 million and improving from September's 7.37 million.
- November's ISM Manufacturing PMI climbed to its highest level since June, reinforcing S&P Global's earlier data indicating robust US manufacturing activity and a resilient economy.
- The CME FedWatch Tool shows a 70% probability of a 25-basis-point rate cut at the Fed's December meeting, while Chicago Board of Trade data suggests 17 bps of easing by the end of 2024.
- Fed Governor Christopher Waller signaled support for a December rate cut but noted that incoming data could justify holding rates steady.
Technical outlook: Gold price consolidates within $2,600 and the 50-day SMA
Gold’s uptrend remains intact, but prices have consolidated within the $2,600-$2,650 range for the last five trading days. The non-yielding metal failed to find acceptance above the 50-day Simple Moving Average (SMA) at $2,688, which once cleared could pave the way for buyers to challenge the $2,700 figure. A breach of the latter will expose the year-to-date (YTD) peak of $2,790.
Conversely, if Gold prices tumble below the $2,600 mark, they could extend to the 100-day SMA at $2,576. On further weakness, the next support levels would be $2,550, followed by the November 14 swing low of $2,536.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD breaks below 1.1000, looks at Powell
The US Dollar's rebound now picks up further pace and sends EUR/USD back to the sub-1.1000 region, or daily lows, ahead of the speech by Fed's Chair Jerome Powell on the "Economic Outlook".
GBP/USD drops to two-day lows near 1.2950
GBP/USD continues to give away part of the weekly strong advance and revisits the mid-1.2900s on the back of further recovery in the Greenback prior to Chair Powell's speech.
Gold remains on the back foot around $3,000 after US Payrolls
In the wake of March’s US labour market report, Gold prices maintain their offered tone around the critical $3,000 mark per troy ounce amid marginal gains in the Greenback and further weakness in US yields.
Can Maker break $1,450 hurdle as whales launch buying spree?
Maker holds steadily above $1,250 support as a whale scoops $1.21 million worth of MKR. Addresses with a 100k to 1 million MKR balance now account for 24.27% of Maker’s total supply. Maker battles a bear flag pattern as bulls gather for an epic weekend move.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.