Gold's Winning Streak: Weekly Gains and Market Trends...
The XAU/USD (gold price) experienced a roller-coaster ride during the trading session, reaching a daily high of $1,952 before retreating to the $1,940 level.
Initially, US yields took a dip following the release of mixed US Nonfarm Payrolls (NFP) data. However, they later rebounded thanks to strong data from the US Institute for Supply Management (ISM) Manufacturing Purchasing Managers' Index (PMI) for August.
As the week drew to a close, the spot price of gold, XAU/USD, relinquished its daily gains and edged back towards the $1,940 mark. Despite this retreat, the yellow metal was on track to end the week on a positive note, with a weekly gain of over 1%.
The highly anticipated US Nonfarm Payrolls report for August delivered mixed results. On a positive note, the headline NFPs surpassed expectations, rising to 187,000, exceeding the projected 170,000 and the previous month's 157,000. However, Average Hourly Earnings disappointed, increasing by only 0.2% month-on-month (MoM) compared to the expected 0.3%. Unemployment, on the other hand, rose to 3.8% in the same month, defying earlier forecasts.
Regarding economic activity, the Institute for Supply Management (ISM) Manufacturing PMI figures for the United States outperformed expectations in August, with an actual reading of 47.6, surpassing the anticipated figure of 47, up from the previous month's 46.4.
The US bond yields, often seen as the opportunity cost of holding gold, exhibited volatility in response to the employment and economic activity data. The 2-year yield dipped to a three-week low, reaching around the 4.76% level before settling at 4.85%. Similarly, the 5 and 10-year yields declined to their lowest levels since August 10, closing at 4.27% and 4.15%, respectively.
Regarding expectations for the Federal Reserve (Fed) and its future actions, the market scaled back its bets on an additional interest rate hike in 2023. According to the CME FedWatch tool, investors remained confident that the Fed would not raise rates in its September meeting, with the odds of a hike in November and December dropping to nearly 35%. This shift in expectations played a role in the dynamics of gold prices and US bond yields during the week.
Initially, US yields took a dip following the release of mixed US Nonfarm Payrolls (NFP) data. However, they later rebounded thanks to strong data from the US Institute for Supply Management (ISM) Manufacturing Purchasing Managers' Index (PMI) for August.
As the week drew to a close, the spot price of gold, XAU/USD, relinquished its daily gains and edged back towards the $1,940 mark. Despite this retreat, the yellow metal was on track to end the week on a positive note, with a weekly gain of over 1%.
The highly anticipated US Nonfarm Payrolls report for August delivered mixed results. On a positive note, the headline NFPs surpassed expectations, rising to 187,000, exceeding the projected 170,000 and the previous month's 157,000. However, Average Hourly Earnings disappointed, increasing by only 0.2% month-on-month (MoM) compared to the expected 0.3%. Unemployment, on the other hand, rose to 3.8% in the same month, defying earlier forecasts.
Regarding economic activity, the Institute for Supply Management (ISM) Manufacturing PMI figures for the United States outperformed expectations in August, with an actual reading of 47.6, surpassing the anticipated figure of 47, up from the previous month's 46.4.
The US bond yields, often seen as the opportunity cost of holding gold, exhibited volatility in response to the employment and economic activity data. The 2-year yield dipped to a three-week low, reaching around the 4.76% level before settling at 4.85%. Similarly, the 5 and 10-year yields declined to their lowest levels since August 10, closing at 4.27% and 4.15%, respectively.
Regarding expectations for the Federal Reserve (Fed) and its future actions, the market scaled back its bets on an additional interest rate hike in 2023. According to the CME FedWatch tool, investors remained confident that the Fed would not raise rates in its September meeting, with the odds of a hike in November and December dropping to nearly 35%. This shift in expectations played a role in the dynamics of gold prices and US bond yields during the week.
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