Gold Holds Above $2,000 as Investors Await US CPI Data
Overview:
Gold prices are extending their trading range for the fourth consecutive Wednesday as investors exercise caution ahead of the highly anticipated US Non-Farm Payrolls (NFP) data scheduled for release later in the day.
US NFP Data's Potential Impact on Gold:
Gold prices are currently fluctuating without a clear direction, as traders refrain from making significant bets on the US Dollar (USD) ahead of the crucial US Non-Farm Payrolls (NFP) data. The USD is recovering after a sharp decline, especially against the Japanese Yen (USD/JPY), which hit a four-month low of 141.63. The market anticipates potential policy adjustments by the Bank of Japan (BoJ) sooner than expected.
Despite the USD sell-off, gold prices are not benefiting due to the robust recovery of US Treasury bond yields from multi-month lows, reducing the appeal of non-interest-bearing gold. Markets are repositioning their positions in US government bonds and the USD as they seek to lock in profits ahead of the Federal Reserve's interest rate decision next week.
Market Focus on US Labor Market Data:
The highly anticipated US labor market data will be closely scrutinized for fresh insights into the Federal Reserve's interest rate outlook. The market is pricing in a 60% probability of a rate cut in March, and the NFP data for November is expected to show an addition of 180,000 jobs, up from the previous 150,000. Average hourly earnings, an indicator of wage inflation, are predicted to increase by 4.0% compared to the same period last year.
Recent US labor market data, including ADP employment and JOLTS reports, suggest loosening labor market conditions. If the weak US NFP print confirms this trend, expectations for a Fed rate cut may surge, impacting the USD and US Treasury bond yields. In such a scenario, gold prices could sustainably reclaim the $2,050 barrier. Conversely, if the data significantly exceeds expectations, the market may use it as a reason to take profits ahead of the Fed's decision, leading to a potential downward adjustment in gold prices targeting the $2,000 level.
Gold prices are extending their trading range for the fourth consecutive Wednesday as investors exercise caution ahead of the highly anticipated US Non-Farm Payrolls (NFP) data scheduled for release later in the day.
US NFP Data's Potential Impact on Gold:
Gold prices are currently fluctuating without a clear direction, as traders refrain from making significant bets on the US Dollar (USD) ahead of the crucial US Non-Farm Payrolls (NFP) data. The USD is recovering after a sharp decline, especially against the Japanese Yen (USD/JPY), which hit a four-month low of 141.63. The market anticipates potential policy adjustments by the Bank of Japan (BoJ) sooner than expected.
Despite the USD sell-off, gold prices are not benefiting due to the robust recovery of US Treasury bond yields from multi-month lows, reducing the appeal of non-interest-bearing gold. Markets are repositioning their positions in US government bonds and the USD as they seek to lock in profits ahead of the Federal Reserve's interest rate decision next week.
Market Focus on US Labor Market Data:
The highly anticipated US labor market data will be closely scrutinized for fresh insights into the Federal Reserve's interest rate outlook. The market is pricing in a 60% probability of a rate cut in March, and the NFP data for November is expected to show an addition of 180,000 jobs, up from the previous 150,000. Average hourly earnings, an indicator of wage inflation, are predicted to increase by 4.0% compared to the same period last year.
Recent US labor market data, including ADP employment and JOLTS reports, suggest loosening labor market conditions. If the weak US NFP print confirms this trend, expectations for a Fed rate cut may surge, impacting the USD and US Treasury bond yields. In such a scenario, gold prices could sustainably reclaim the $2,050 barrier. Conversely, if the data significantly exceeds expectations, the market may use it as a reason to take profits ahead of the Fed's decision, leading to a potential downward adjustment in gold prices targeting the $2,000 level.
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