Risk-On Hurting Gold

Gold prices are trading a little lower on Monday as we kick of the week with a positive risk tone. Despite the ongoing conflict in Gaza, traders have been buoyed by Friday’s set of weaker-than-forecast US jobs numbers. The headline NFP printed 150k, down from 297k prior and below the 178k the market was looking for. Additionally, wages were seen slipping to 0.2% from 0.3% prior and expected while the unemployment rate was seen rising to 3.9%, above the prior and expected 3.8% level. In all, the data was seen as making a strong case for the Fed remaining on hold through year-end, with market pricing for a further rate hike dropping sharply.

Fed Speak & Middle East Risks

Looking ahead this week, we have a slew of Fed speakers on deck, including Fed chairman Powell. These comments are likely to be highly market moving given the recent data and should USD come under pressure from any perceived Fed dovishness, risks assets are likely to trade higher still, offsetting the benefit to gold prices. With this in mind, the near-term outlook for gold looks somewhat murky. However, it’s important to note that upside risks remain around any escalation of the conflict in the Middle East which might fuel a wave of risk aversion, particularly on any headlines regarding Hezbollah joining the war.

Technical Views

Gold

The breakout above the 1973.51 level has stalled for now with price currently retesting the area. While the level holds, the focus remains on further upside with 2069.41 the next objective for bulls. However, should price slip back below the level, there is risk of a deeper move down to 1871.04, in line with falling momentum studies readings.