October 4, 2024
New Delhi, India
Gold Prices
The gold price (XAU/USD) continues to face challenges in maintaining upward momentum, staying below its weekly top during Friday’s European session. A key factor limiting gains is the diminishing likelihood of aggressive policy easing by the Federal Reserve (Fed). As a result, traders are adopting a cautious approach ahead of the release of crucial US Nonfarm Payrolls (NFP) data, which will shape market expectations regarding future Fed rate cuts.
Key Factors Influencing Gold:
- US Dollar Pullback:
A modest US Dollar (USD) pullback from a one-month high on Thursday lent some support to gold prices. However, traders are awaiting the NFP report to gauge the strength of the US labor market and its impact on Fed policy. The US economy is expected to add 140,000 jobs in September, with the Unemployment Rate holding steady at 4.2%. - Geopolitical Tensions:
Ongoing conflicts in the Middle East, particularly the escalating violence between Israel and Hezbollah, have provided safe-haven support for gold. Reports indicate that Israel is preparing a significant retaliation after Iran launched nearly 200 ballistic missiles earlier in the week, raising the possibility of a broader conflict. - Fed Policy Outlook:
While geopolitical risks have supported gold, the market’s focus remains on the Fed’s next move. The odds of a major rate cut in November have decreased, capping gains for the non-yielding yellow metal. Traders will also look to data on Average Hourly Earnings for clues about inflationary pressures and future Fed policy decisions.
Also Read: USDINR Today: Rupee Recovers Despite Weak Services PMI
Market Outlook:
While geopolitical risks provide a boost to gold, the outcome of the US employment data and the Fed’s response to it will be critical in determining the next directional move. Any signs of a resilient labor market could limit gold’s upside, while weaker-than-expected data might trigger a rally.
The combination of Fed policy uncertainty and rising geopolitical tensions has created a complex environment for gold traders. Despite short-term fluctuations, gold’s path of least resistance remains to the upside, with geopolitical concerns continuing to underpin demand.
Gold Prices: XAUUSD
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