Gold price posts modest gains, lacks bullish conviction as trade
Gold price posts modest gains, lacks bullish conviction as traders keenly await US NFP
5 January 2024
•Gold price attracts some haven flows on Friday amid geopolitical risks and China’s economic woes.
•Reduced bets for more aggressive policy easing by the Fed cap any further gains for the XAU/USD.
•Traders also seem reluctant to place aggressive bets ahead of the key US monthly jobs report (NFP).
Gold price (XAU/USD) ticks higher during the Asian session on Friday, albeit lacks follow-through as traders keenly await the release of the crucial monthly employment details from the United States (US). The popularly known Nonfarm Payrolls (NFP) report will influence the Federal Reserve's (Fed) future policy decisions amid the uncertainty about the timing of when the rate-cutting cycle might begin and provide a fresh impetus to the precious metal.
Heading into the key data risk, investors continue to pare their bets for more aggressive policy easing by the Fed in the wake of Thursday's upbeat US macro data. This remains supportive of elevated US Treasury bond yields, which assists the US Dollar (USD) to hold steady just below a near three-week low touched on Wednesday and caps gains for the non-yielding Gold price. That said, a softer risk tone is seen acting as a tailwind for the safe-haven XAU/USD.
Daily Digest Market Movers: Gold price remains supported by the prevalent risk-off mood
•Geopolitical risks, along with China's economic woes, continue to weigh on investors' sentiment and offer some support to the safe-haven Gold price on Friday.
•The benchmark 10-year US Treasury yield holds steady near 4.0% amid reduced bets for multiple rate cuts by the Federal Reserve and caps the XAU/USD.
•Traders trimmed expectations on the number of rate cuts by the Fed in 2024 to four from six on Wednesday following the release of the upbeat US macro data.
•The Automatic Data Processing (ADP) reported on Thursday that US private-sector employers added 164K jobs in December as against 115K expected.
•Adding to this, a report published by the US Department of Labor (DOL) showed that Weekly Jobless Claims fell more than expected, to 202K last week.
•The US Dollar bulls, meanwhile, seem reluctant to place aggressive bets and prefer to wait for the release of the closely-watched official US monthly jobs data.
•The popularly known Nonfarm Payrolls (NFP) report is expected to show that the economy added 170K new jobs in December vs 199K in the previous month.
•The unemployment rate is anticipated to edge higher to 3.8% from 3.7%, while Average Hourly Earnings growth is seen easing to 3.9% YoY rate from 4.0% in November.
•The crucial employment figures could guide the Fed's near-term policy outlook, which will influence the USD and provide a fresh impetus to the non-yielding metal.
Technical Analysis: Gold price needs to move beyond $2,050 barrier for bulls to seize control
From a technical perspective, any subsequent move up might continue to confront stiff resistance near the $2,050-$2,048 region. The said area should now act as a key pivotal point for intraday traders, which if cleared should lift the Gold price to the next relevant hurdle near the $2,064-2,065 zone. Given that oscillators on the daily chart are still holding in the positive territory, the upward trajectory could get extended further towards the $2,077 region en route to the $2,100 round figure.
On the flip side, the weekly swing low, around the $2,030 zone, seems to protect the immediate downside. This is followed by the 50-day Simple Moving Average (SMA), currently around the $2,011-2,010 region, and the $2,000 psychological mark. A convincing break below the latter will be seen as a fresh trigger for bearish traders and set the stage for the resumption of the downtrend witnessed over the past week or so.