Gold prices rose strongly on Thursday, supported by the pullback in US Treasury yields. However, cautious investors await this week’s US nonfarm payrolls report for more clues on the Federal Reserve’s stance.
Brian Lan: Gold prices will be range dependent in the near term
Spot gold was up 1.19% at $1,786.13 at the time of writing. U.S. gold futures rose 1.36% to $1,800.06. Benchmark US 10-year Treasury yields fell from their highest levels in more than a week. This reduced the opportunity cost of holding interest-free gold. Brian Lan, general manager of GoldSilver Central reseller, comments:
Most investors are on the sidelines. Because there are rising tensions between the US and China. That’s why people aren’t sure what’s going to happen. There’s also another area where people think that if interest rates go up, holding the dollar probably makes more sense than holding gold. So I expect gold prices to be range dependent in the near term.
Investors focus on US NFP report
The dollar limits the rise of gold. However, gold is hovering near its highest level this week after Fed officials’ hawkish comments. According to analysts, the Fed’s rate hikes will significantly curb US economic activity. Despite this, policymakers said this week that the Fed is committed to lowering inflation.
Some strong economic data came in this week. However, the focus now is on US employment data, which could further clarify the Fed’s aggressive tightening to combat stubborn inflation. The US NFP report will arrive on Friday.
Edward Moya: It is possible for gold to continue its uptrend
Meanwhile, the holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, are considered indicators of sentiment. Assets fell to 1,000.65t Wednesday, their lowest level since mid-January. Edward Moya, senior analyst at OANDA, comments:
Some Fed speakers echoed an aggressive stance. This resulted in limited entry in gold. However, fears of a global recession may put an end to these aggressive rate hikes. Therefore, gold may continue its uptrend.
“Fed’s policy stance as primary driver for yellow metal”
According to Edward Moya, the primary driver for bullion will be Wall Street’s assessment of how many larger rate hikes the Fed has left until it enters a period of holding policy. In this context, the analyst says:
At the September FOMC meeting, the possibility of a 75 basis point increase seems very high on the table. It is possible that this will support the dollar. Therefore, this is likely to make it difficult for gold to rise above the $1,800 level for now.
Ricardo Evangelista: If this happens it will put pressure on gold
Gold is considered a safe investment amid geopolitical and economic uncertainties. cryptocoin.comAs you follow, investors are awaiting Friday’s US jobs data. Ricardo Evangelista, senior analyst at ActivTrades, explains:
Friday’s employment numbers will offer greater clarity on what the path to tightening the Fed will be. An upside surprise is likely to bolster prospects for a more hawkish central bank. Therefore, it will put pressure on gold.
Pablo Piovano: Further upside looks limited
Interest open on horse futures markets dropped just 91 contracts on Wednesday. Thus, it expanded its downtrend for the fourth consecutive session, according to preliminary data from CME Group. Volume followed suit, shrinking by approximately 20.7k contracts, partially reducing the previous structure.
Gold prices rose on Thursday. But this move was against the backdrop of declining open interest and volume, according to market analyst Pablo Piovano. Therefore, the analyst notes that he has limited the upside movement around $1,800 for now.
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