Gold is spending another day above $2,000 as prices hit record highs as recession fears increase market sentiment. The market is currently awaiting the US NFP data, which will be released today.
Big moves could be seen in US Non-Farm Payrolls
The price of gold follows the US dollar’s volatility but is holding at $2,0076 in mid-day trading, hovering between the low of $2,000.74 and the high of $221.33 so far throughout the day. cryptocoin.com As we have reported, the market is currently awaiting the US Non-Farm Payrolls report due Friday.
Gold bulls will want to see if there is any confirmation that the labor market is cooling, a key requirement in the Federal Reserve’s fight to keep inflation down. In this context, special attention will be paid to the Unemployment Rate. Analysts at Brown Brothers Harriman make the following assessment of future employment data:
For nonfarm payrolls data to be released this Friday, the consensus is 240k, compared to 311k in February, with the unemployment rate holding steady at 3.6%. Average hourly earnings are expected to decline to 4.3%, compared to 4.6% in February. It is noteworthy that the data will be released on Good Friday. Since the markets will probably be very weak, we could get some big moves from the numbers, good or bad.
Recession risk intensifies with latest data
According to ActivTrades senior analyst Ricardo Evangelista, gold prices continued to rise, approaching an all-time high reached in the summer of 2020, when uncertainty from the pandemic led investors to the safety of the precious metal. This time, the analyst says the reasons behind investor concerns can be attributed to fears of the economic slowdown.
Recession risk intensified with the latest data pointing to a slowdown in the economy. The ADP National Employment report found that US private sector employers created fewer jobs than expected in March, with payrolls increasing by 145,000. This comes after US job vacancies fell to less than ten million in February, the lowest level in nearly two years, according to the Job Gaps and Workforce Turnover Survey. Also, the US services sector slowed in March, with the Institute for Supply Management (ISM) showing that non-manufacturing PMI fell to 51.2 last month. Earlier this week, markets digested the decline in factory orders and slowing manufacturing activity. Evangelista comments:
The banking crisis in March revealed the negative impact of aggressive monetary tightening by central banks on the real economy. Economic data has shown a slowdown in activity and confidence since it was released, and OPEC plus’s latest announcement of its intent to cut output will likely feed inflation and contribute to worsening investor sentiment.
Short to medium term course for gold looks fair
Although some Fed speakers are still talking about further hikes, markets are pricing in an increased likelihood of a rate cut this year. According to the CME FedWatch Tool, the probability of a rate cut in July is around 50%. Rupert Rowling, Kinesis Money market analyst, explains:
Market conditions are strengthening gold’s hand and the precious metal is further supported by the weakening of the US dollar, with which gold typically has an inverse relationship. Add to that the possibility that gold’s biggest headwind, the Fed rate hike, will end in the coming months, and the short and medium-term route for the ultimate haven seems fair.
It is possible for gold prices to rise further.
Federal Reserve Bank of Cleveland Governor Loretta Mester said on Tuesday that rates should rise above 5% and stay there for a while. But markets ignore such hawkish rhetoric. Ricardo Evangelista comments:
Despite the growing views that the global economy is heading for a serious contraction, central banks leave their concerns aside and prefer to focus on fighting inflation, which is persistently high through increasingly higher interest rates. In this context, it is possible for gold prices to rise even more.
Gold price technical analysis
In the previous gold price analysis, there was a bullish price pennant on the daily and 4-hour charts:
Gold price updates
Gold bulls are back in the market after an expected drive around the supportive area. Gold bulls needed to commit to break above $2,010 at this point and stay above it.
The gold price Fibonacci scale has been shown to come into play. Gold price’s 38.2% Fibonacci retracement is aligned with the $2,000 area, which could come under pressure for a retest, if not lower, before the next bullish impulse and an eventual upside retracement.
The gold price doji is a holding candle and can be followed by a bearish divergence below it which can bias the expectation of a lower move. However, as long as the gold bulls remain stable, this bullish cycle will need more work for the yellow metal.
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