Gold price edges higher on Powell’s comments – FXStreet
Gold gains as Chairman Powell emphasizes the need for prudent monetary policy.
Mixed US economic indicators, including somewhat disappointing ADP employment trends, support cautious investor sentiment.
The Fed's Mr. Mussallem maintains the discretionary nature of the December meeting.
Gold prices rose in North American trading on Wednesday following mixed US economic data. Nevertheless, non-yielding metals remained slightly subdued due to Federal Reserve Chairman Jerome Powell's hasty intervention. XAU/USD is trading 0.35% higher at $2,652.
Powell said the U.S. economy was in good shape, adding that September's interest rate cut was a message to support the labor market. He said that while progress was being made, it was too early to declare victory on inflation and that the U.S. central bank could be cautious in its monetary policy decisions.
Inflation has recently turned out to be stronger than expected. The latest three measurements show that the process of defusing inflation has stalled. Despite rising by a tenth, prices are still far from the Fed's 2% target.
Other officials also crossed the news wire. St. Louis Fed President Alberto Moussallem suggested the time may be near to delay or pause rate cuts. He noted that the labor market is at full employment and expressed confidence that inflation could reach the 2% target within the next two years.
Meanwhile, Richmond Fed President Thomas Barkin said the risks to inflation and maximum employment appear to be balanced.
On the data side, the US ADP national employment change report was slightly lower than expected in November, but revised downward for October. S&P Global and the Institute for Supply Management (ISM) said the services PMI has cooled slightly, suggesting the economy remains strong but is slowing.
Ahead of this week, the U.S. document will feature Fed speakers, new jobless claims and nonfarm payrolls (NFP) numbers.
Daily Digest Market Trends: Gold Prices Take Advantage of Weak US Economic Indicators
Gold prices rose as US real yields fell by 4 basis points to 1.904%.
The yield on the 10-year US Treasury note fell 4 basis points to 4.184%.
The US Dollar Index (DXY), which tracks the performance of the US dollar against six currencies, fell 0.01% on the day to 106.32.
According to the November U.S. ADP National Employment Report, private sector payrolls increased by 145,000 jobs, lower than the 150,000 expected and a downwardly revised 184,000 in October (previously 238,000). person).
The ISM Services PMI for November fell from 56 to 52.1, below expectations of 55.7, while the S&P Global Services PMI also fell from 57 to 56.1, below expectations.
U.S. durable goods orders in October increased by 0.3% from the previous month, a slight improvement from the previously announced 0.2%.
ADP data and Tuesday's latest Job Openings and Labor Turnover Survey (JOLTS) report confirm that the labor market remains strong. Fed policymakers, who have set aside price stability and shifted their dual mandate priority to maximum employment, may be relieved that the economy remains strong.
The CME FedWatch tool shows a 79% chance of a 25 basis point rate cut at the December Fed meeting, and Chicago Commodity Exchange Commission data shows a 19 basis point rate cut by the end of 2024. This indicates that the mitigation of
Technical outlook: Gold price stabilizes within $2,600 and 50-day SMA
Although gold prices are still on the rise, they have remained stable between $2,600 and $2,650 over the past seven days. The upside is capped by the 50-day simple moving average (SMA) of $2,668. If it breaks, there will be $2,700 in damages.
If it strengthens further, the bulls could test the year-to-date (year-to-date) high of $2,790. On the other hand, if the bears intervene, XAU/USD could rise to $2,600 and subsequently have a 100-day SMA of $2,578.
Gold FAQ
Gold has played an important role in human history as it has been widely used as a store of value and a medium of exchange. Today, apart from their brilliance and use as jewellery, precious metals are widely seen as safe assets, meaning they are considered a good investment in turbulent times. Gold is also widely seen as a hedge against inflation and currency depreciation, as it is not dependent on any particular issuer or government.
Central banks are the largest holders of gold. With the aim of supporting their currencies in times of turmoil, central banks tend to purchase gold to diversify foreign exchange reserves and improve perceptions of economic and currency strength. High gold reserves can be a source of confidence in a country's solvency. Central banks added 1,136 tonnes of gold worth about $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest annual purchase amount since records began. Central banks in emerging countries such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has an inverse relationship with the US dollar and US Treasuries, which are major reserve and safe haven assets. Gold tends to rise when the dollar falls, allowing investors and central banks to diversify their assets during times of turmoil. Gold is also inversely correlated with risk assets. Rising stock markets tend to push gold prices down, while declines in riskier markets tend to favor the precious metal.
Prices may vary depending on various factors. Geopolitical instability and fears of a deep recession can cause the price of gold to quickly rise from its safe-haven status. Gold, a non-yielding asset, tends to rise when interest rates fall, but rising costs typically put pressure on the yellow metal. Still, most moves will depend on how the US dollar (USD) behaves, as the asset is priced in dollars (XAU/USD). A strong dollar tends to suppress gold prices, while a weak dollar can push gold prices up.
Gold price edges higher on Powell’s comments – FXStreet
Gold prices rose in North American trading on Wednesday following mixed US economic data. Nevertheless, non-yielding metals remained slightly subdued due to Federal Reserve Chairman Jerome Powell's hasty intervention. XAU/USD is trading 0.35% higher at $2,652.
Powell said the U.S. economy was in good shape, adding that September's interest rate cut was a message to support the labor market. He said that while progress was being made, it was too early to declare victory on inflation and that the U.S. central bank could be cautious in its monetary policy decisions.
Inflation has recently turned out to be stronger than expected. The latest three measurements show that the process of defusing inflation has stalled. Despite rising by a tenth, prices are still far from the Fed's 2% target.
Other officials also crossed the news wire. St. Louis Fed President Alberto Moussallem suggested the time may be near to delay or pause rate cuts. He noted that the labor market is at full employment and expressed confidence that inflation could reach the 2% target within the next two years.
Meanwhile, Richmond Fed President Thomas Barkin said the risks to inflation and maximum employment appear to be balanced.
On the data side, the US ADP national employment change report was slightly lower than expected in November, but revised downward for October. S&P Global and the Institute for Supply Management (ISM) said the services PMI has cooled slightly, suggesting the economy remains strong but is slowing.
Ahead of this week, the U.S. document will feature Fed speakers, new jobless claims and nonfarm payrolls (NFP) numbers.
Daily Digest Market Trends: Gold Prices Take Advantage of Weak US Economic Indicators
Technical outlook: Gold price stabilizes within $2,600 and 50-day SMA
Although gold prices are still on the rise, they have remained stable between $2,600 and $2,650 over the past seven days. The upside is capped by the 50-day simple moving average (SMA) of $2,668. If it breaks, there will be $2,700 in damages.
If it strengthens further, the bulls could test the year-to-date (year-to-date) high of $2,790. On the other hand, if the bears intervene, XAU/USD could rise to $2,600 and subsequently have a 100-day SMA of $2,578.
Gold FAQ
Gold has played an important role in human history as it has been widely used as a store of value and a medium of exchange. Today, apart from their brilliance and use as jewellery, precious metals are widely seen as safe assets, meaning they are considered a good investment in turbulent times. Gold is also widely seen as a hedge against inflation and currency depreciation, as it is not dependent on any particular issuer or government.
Central banks are the largest holders of gold. With the aim of supporting their currencies in times of turmoil, central banks tend to purchase gold to diversify foreign exchange reserves and improve perceptions of economic and currency strength. High gold reserves can be a source of confidence in a country's solvency. Central banks added 1,136 tonnes of gold worth about $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest annual purchase amount since records began. Central banks in emerging countries such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has an inverse relationship with the US dollar and US Treasuries, which are major reserve and safe haven assets. Gold tends to rise when the dollar falls, allowing investors and central banks to diversify their assets during times of turmoil. Gold is also inversely correlated with risk assets. Rising stock markets tend to push gold prices down, while declines in riskier markets tend to favor the precious metal.
Prices may vary depending on various factors. Geopolitical instability and fears of a deep recession can cause the price of gold to quickly rise from its safe-haven status. Gold, a non-yielding asset, tends to rise when interest rates fall, but rising costs typically put pressure on the yellow metal. Still, most moves will depend on how the US dollar (USD) behaves, as the asset is priced in dollars (XAU/USD). A strong dollar tends to suppress gold prices, while a weak dollar can push gold prices up.
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