Gold Higher on Monday
Gold prices are starting the week on a firmer footing with the futures market in the green so far through early European trading on Monday. The move looks linked to the renewed focus on US rate-cut expectations. Recent data weakness and dovish commentary from some Fed members has seen rate cut pricing creeping higher with markets now pricing in a cut in September followed by a further cut ahead of year end. While Powell has been a little more cautious in his rates outlook, the Fed chair’s semi-annual testimony to Congress last week saw some dovish leaning which traders have picked up on.
NFP on Thursday
Looking ahead this week, traders will be focusing on the US labour market reports due a day earlier on Thursday because of the Independence Day holiday in the US on Friday. If the data weakens further, as expected, this could see gold prices gaining sharply as near-term Fed rate cut expectations creep higher. Alternatively, any upside surprise on Friday could create some pushback against rate-cut expectations, leading USD higher again while dampening gold prices.
US Trade War
Away from Fed rate-cut expectations, traders are also monitoring the US trade war and various geo-political situations around the globe. Last week, news of a US/China deal on rare-earth exports helped improve optimism that a full trade deal between the two could still be achieved. The US is also reportedly getting closer to agreeing trade deals with other partners. Any further positive trade news could hamper gold prices this week via reduced safe-haven inflows.
Technical Views
Gold
The sell off in gold has stalled for now into a test of the 3,254.65-level support and the bull trend line. While this area holds, focus is on a fresh push higher and a further test of the 3,426.44-level resistance. If we break lower here, 3,164.82 will be the deeper support to watch.
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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.