Gold Rallies Ahead of US Jobs Data
NFPs Up Next
Gold prices are on watch today as traders brace for the latest US jobs report this afternoon. USD has fallen back sharply in recent days after starting the week on a strong footing following last Friday’s rally fuelled by Fed chair Warsh’s hawkish comments at the Jackson Hole Symposium. Since then, however, dovish comments from both Fed’s Williams and Waller have spooked traders, sending rate hike expectations lower and USD lower accordingly. Against this backdrop, gold prices have rallied over the last 48 hours with the futures market rallying around 5% off the week’s lows, now positive on the week ahead of the data.
Conflicting Fed Comments
Market pricing for a September rate hike has been sifting wildly in recent weeks. Ahead of Warsh’s speech, the CME group priced a hike around the 35% level, this then soared to around 70% following his comments. However, this week, pricing has drifted steadily lower, falling to 60% after Williams’ comments and down to 50% (current) after Waller’s comments yesterday. As such, there is plenty of two-way risk today. If jobs data surprises to the upside, rate hike pricing should surge back above the 70% level sending gold lower as USD rebounds. Alternatively, if fresh weakness is confirmed, gold prices should rally firmly as USD and September tightening expectations plunge.
Technical Views
Gold
The sell off in gold has stalled for now with price finding fresh demand on the attempted break below 4,389.24. Price is now fast approaching a fresh test of the 4,558.62 level which, if broken, will put focus back on the August highs and the 4,871.47 level thereafter.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.