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Mixed outlook for gold prices after the non-farm payroll report -by Ecork

Golden Key Points:

  • Gold Price (XAUUSD) It extends gains, up 1.6% on the week.
  • NFP . job data Exceeds all expectations, adding pressure on the Federal Reserve.
  • Geopolitical uncertainty persists, offers of sanctuary persist

How to trade the impact of politics on global financial markets

Gold (XAUUSD) Prices surged ahead of this week, reaching a high of $1,794.23, down 6.7% from yearly lows and bouncing off support. Bullion rose 1.5% on Thursday and is heading for three consecutive weekly gains after China fired missiles over Taiwan during military exercises. Beijing responded strongly to the US House of Representatives sPresident Nancy Pelosi’s visit to the island this week, the highest-ranking American politician to go there in 25 years.

Gold (XAUUSD) Benefited from dollar weakness, lower US bond yields and some haven support amid ongoing geopolitical risks. Bullish comments from Federal Reserve officials pledged that the central bank will continue a fierce battle to cool soaring inflation. Loretta J. Meester, President Federal Reserve Bank From Cleveland, he said Thursday that the Fed must raise interest rates above 4% in order to bring inflation back to target. These comments had little effect on the price of gold With continued demand for refuge.

source: Bloomberg

Soaring job growth in the US threatens to disrupt the bullion run

US employers added more than double Expected number of jobs, which illustrates strong labor demand easing recession fears and indicating that the Fed will continue to raise sharp interest rates to thwart inflation. Treasury prices rose higher on bets that the Federal Reserve will continue to aggressively raise borrowing costs to calm demand and tame rampant inflationary forces.While strong employment conditions may prompt the Fed to press ahead with plans to increase the front load, they should ease fears that the economy is heading. Duringa cliff. This may help stabilize risk appetite in the short term This led to a decline in demand and a decline in gold prices.

With the Fed emphasizing its affinity for data-driven decisions, wYou will get a better picture of inflation Profile next week when the US Bureau of Labor Statistics releases the Consumer Price Index for July. The CPI is expected to rise 0.3% on a monthly basis The annual rate It is expected to decline to 8.9%, from 9.1% In the Previous Month.

Geopolitical uncertainty remains

The fallout from US House Speaker Nancy Pelosi’s visit to Taiwan has kept markets on alert for most of the week. Concern subsided somewhat after the trip ended, but China has since begun military exercises in the areas around the island. China fired 11 Donfeng ballistic missiles into the waters around Taiwan in its biggest test in decades. China’s Foreign Ministry announced new countermeasures against Washington on Friday, including suspending climate talks, cooperation on repatriation of illegal immigrants, legal assistance in criminal matters, and combating cross-border crimes. If we see a continued escalation of tensions, we could see demand for safe havens grow even stronger Bullion will probably be one of the main winners.

XAUUSD D . Chart

He went

source: TradingViewPrepared by Zain Fouda

Final thoughts and next week

Market reaction after the NFP jobs report saw an immediate drop of $26 on XAUUSD from around the world. American dollar1790 to American dollar1764 before rising again. The 50-SMA Offer resistance as we trade between 20 and 50-SMA. The daily candle appears set to close as a bearish inside bar candle which would indicate more downside as the new week begins while American dollar1800 The main psychological level It is just above this week’s high.

as such Investors and most importantly US Federal Reserve Keep watching the data closely and sentiment seems to change after every minute releaseAnd the Next week’s inflation data is set to Show that inflation remains at uncomfortably high levels. If this is the case, we could see the dollar rise which could lead to further declines for precious metals.

Written by Zain Fouda for DailyFX.com

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