Gold gets a breather as dollar stalls

2024-01-05
Summary:

Gold stabilized Friday after its first 5-day gain ahead of the US nonfarm payrolls report. The Iran explosion might offer additional support.

Gold steadied on Friday following its first gain in five days in the run-up to US nonfarm payrolls print. It may also have drawn some support from the deadly blast in Iran.

Data showed that US weekly jobless claims fell more than expected last week and private employers hired more workers than expected in Dec, as opposed to a softening labour market.


But a Reuters poll suggests that bullion could grapple with a resilient US dollar as the greenback’s recent slide is expected to be short-lived with aggressive rate cuts priced in.


Minutes from December's policy meeting showed most policymakers agreed borrowing costs need to remain high for some time, suggesting a March cut is less likely. Traders are pricing in about a 65% chance of a cut in two months.


A majority of the analysts said the greater risk to their three-month forecast was the dollar trades stronger than predicted. The yen, the pound and the euro were forecast to gain 6.6%, 5.0% and over 2% respectively during 2024.


Spot gold enjoyed its best year since 2020 and the fundamentals of a dovish pivot in interest rates, continued geopolitical risk, and central bank buying will likely be benefiting.

XAUUSD

The precious metal seems natural at the moment, located well above its 50 SMA. A break through $2,050 is needed to retest its recent high around $2,080.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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