Gold broke the coveted $1,800 per ounce level on Thursday amid escalating geopolitical tensions between the US and China. However, the upcoming Friday’s jobs report could break the momentum, according to analysts. It is thought that the employment data to be announced today will also affect Bitcoin. Here are the details…
What are the prospects for gold?
December gold futures rose $33 to $1,812 on Thursday. At the time of writing, prices were $1,808.20 per ounce. Taiwan has been at the center of recent geopolitical tensions between the US and China. On Thursday, China launched several ballistic missiles around Taiwan in retaliation for the visit of US House Speaker Nancy Pelosi, which scared the markets. China is also conducting aggressive military maneuvers. Han Tan, chief market analyst at Exinity Group, used the following statements:
The aggressive tone emanating from Beijing in response to Pelosi’s visit to Taiwan has led to a classic safe-haven game, with gold and Treasury bonds rising alongside the US dollar and Japanese Yen in recent sessions.
According to Bannockburn Global Forex chief market strategist Marc Chandler, this situation will continue to improve through the end of the week. “As China continues its military harassment of Taiwan, US President Biden is pushing against a Senate bill that would recognize Taiwan as a ‘significant non-NATO ally’ and increase its representation in international forums,” Chandler said. This was an encouraging rally for gold after a stronger US dollar triggered a sell-off at $1,700 an ounce in July.
TD Securities drew attention to $1,789
On a technical basis, a close above $1,789 would be a solid sign of future gains, according to TD Securities strategists. “We anticipate closing prices above $1,789 will catalyze enough change in momentum,” they said in a statement Thursday. The biggest hurdle, however, is the July employment report from the US, released on Friday. “As nonfarm payrolls hit the start of the week tomorrow, our expectations for a stronger-than-expected report could quickly put a cap on the prevailing rise among gold fans,” TD Securities analysts said.
Consensus calls from economists expect the economy to add 250,000 new jobs in July after creating 372,000 in June. Pointing to tough policy, Fed speakers contributed to higher gold prices this week, opposing the idea of the US central bank turning back from rate hikes. Win Thin, head of BBH Global Currency Strategy, said:
They adhered to the script created one after another. What we’re seeing is a coordinated and well-crafted communication effort by the Fed. It means leaving no doubt about the Fed’s intention to raise rates until inflation. Whatever the cost of growth and employment is going down.
Chicago Fed President’s statements drew attention
Chicago Fed President Charles Evans has said from recent comments that the US central bank will continue to raise interest rates until it sees inflation fall. “If you really think things aren’t improving… 50 (basis points) is a reasonable assessment, but 75 might also be good,” he told reporters on Tuesday. “I doubt that more will be asked for,” he said. San Francisco Fed President Mary Daly also stated that inflation is still a problem.
According to a growing number of analysts, gold is looking to continue its rally after hitting over $2,000 an ounce in March. “Gold looks more likely to continue its persistent bullish trajectory and break resistance at around $2,000 per ounce compared to sustaining support below $1,700,” said Mike McGlone, senior commodity strategist at Bloomberg Intelligence. “In 2022, the most aggressive Fed tightening since the 1980s includes gold. “It’s only a matter of time before rate hikes subside and allow the metal to continue on its path of least resistance to the upside.”
CNBC’s Cramer also spoke positively about gold
cryptocoin.com As we have also reported, Cramer used positive expressions for gold this week. CNBC’s Jim Cramer also updated his gold outlook this week, calling the current process a “weird period” for precious metals. He said that after this period is the perfect time to enter the gold trade. Cramer quoted the chart analysis of legendary market technician Larry Williams:
Williams finds that when small speculators get too high, it’s almost always a sign that we’re close to a top. We have a bottom. According to the latest trader commitment report, small speculators hold a net 92,690 contracts for gold. This is their least amount of longs since May 2019, just before gold saw a big spike.
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