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04/09/24
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Gold Prices Stabilize as Traders Await Key US Job Data Amid Economic Concerns
Gold prices are stabilizing after a three-day decline, trading just beneath the $2,500 level in Asian markets. This period of consolidation comes as traders pause before the release of US Job Openings data for July, which is expected to provide insights about the Federal Reserve’s future monetary policy.
Despite concerns regarding economic slowdowns in both the US and China, the US Dollar remains under pressure, in turn influencing gold. Recently released data from the US Institute for Supply Management (ISM) indicated a minor increase in the Manufacturing Index, which, although improved, still registered below the forecasted levels. As a result, fears of a potential economic “hard landing” in the US have emerged, raising expectations for a possible 50 basis point interest rate cut by the Federal Reserve later this month.
The likelihood of aggressive monetary easing from the Fed has shifted market sentiment, with a notable increase in the probability of a rate cut, now estimated to be around 41%. This sets the stage for renewed interest in gold, a non-yielding asset that often gains traction during periods of lower interest rates. Additionally, there are expectations of policy support measures from China following disappointing business activity reports, which may further bolster demand for gold.
Looking ahead, the release of the Job Openings data could significantly influence market dynamics. Should the data suggest a weaker job market, it could trigger fresh selling pressure on the Dollar, benefiting gold prices.
From a technical standpoint, gold remains in a favorable position as long as it stays above the 21-day Simple Moving Average at approximately $2,485. A successful close above the $2,500 level would be crucial for a sustained upward movement, with targets set at previous highs of $2,532 and the $2,550 psychological level. However, if prices fall below the 21-day SMA, it could lead to testing lower support levels.
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