Gold climbs as more weak U.S. data boosts Fed rate-pause bets
Gold reaches its highest point in nearly a month due to weak U.S. economic readings, suggesting that the Federal Reserve may halt its interest rate hikes.
Posted 8/30/2023, 6:01:56 AM
cnbc.com
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The recent uptick in gold prices may face resistance at the $2000 milestone, while a dip below $1900 could lead to a decline towards the $1800 range, as gold's volatility is intertwined with the fluctuations of the US dollar and is influenced by interest rates.
Gold and silver prices rise as the weaker U.S. dollar index and dip in U.S. Treasury yields attract futures traders and bargain hunters, while anxieties build over upcoming speeches from the Fed and ECB on future monetary policy direction and the potential shift in the Fed's inflation goal.
Gold prices are slightly up and silver prices have hit a three-week high due to short covering and bargain hunting, with silver seeing significant improvement in its technical posture.
The Federal Reserve raised interest rates to their highest level in 22 years, but experts expect the market to react less dramatically than in the past.
Gold has found support at the 50-Week EMA, suggesting consolidation and a potential target of $2000, but breaking below $1900 could have negative implications for the gold market; the bond markets and interest rates should be monitored to determine gold's future direction, and caution is advised due to the end of summer and the absence of major players in the market.
The gold market is in need of a catalyst to break its current downtrend, with the upcoming economic data playing a crucial role in determining its direction.
Gold price is aiming to sustain above $1,920.00 as pressure builds on the US Dollar and Treasury yields, with the upcoming labor market data playing a crucial role in guiding the Federal Reserve's policy action.
Renewed physical demand from emerging markets, such as India and China, could reignite the gold market's bullish uptrend and drive prices higher towards $2,000 an ounce before the end of the year, according to market strategist George Milling-Stanley.
The improving economic outlook for the US has made gold less appealing to investors, but weakness in US consumers could still lead to a recession and boost the precious metal, while Chinese stimulus may support silver demand, according to Heraeus' precious metals report.
The gold market remains steady despite stable inflation pressures, suggesting that the US central bank may be able to end its tightening cycle.
Gold prices are holding steady gains near session highs as the U.S. labor market showed stability with higher nonfarm payrolls but also a rise in the unemployment rate.
Gold prices remained stable near session lows as the latest data on the U.S. manufacturing sector showed improvement but still indicated contraction for the tenth consecutive month.
Gold prices rose slightly last week while silver remained mostly unchanged, but both metals are expected to potentially move together in an upward direction next week due to a dovish outlook on interest rates and potential repricing of the Federal Reserve's monetary policy.
The Federal Reserve is expected to hold interest rates steady this month, but inflation could still lead to additional rate increases.
Gold prices decline slightly as the dollar remains strong, with investors awaiting further signals on the U.S. Federal Reserve's monetary policy after an expected interest rate pause this month.
The dollar has reached a five-month high as investors anticipate the need for elevated interest rates due to the strong US economy, with factors such as weak growth in China and Europe, rising US yields, and falling equity prices further supporting the case for dollar strength.
The U.S. dollar's dominance in the gold market may be losing momentum, potentially leading to new all-time highs for gold as the dollar weakens, according to market strategist Carley Garner. She expects the U.S. dollar index to hold resistance below 105 points and eventually retest support at 99 points, which could be a game changer for gold, potentially pushing prices to $2,600 an ounce. Garner also highlights the resilience of gold and the potential for a selloff if the Federal Reserve shifts to a more neutral monetary policy stance. However, she is not as optimistic about silver, preferring to focus on gold.
China's central bank continues to increase its gold reserves for the 10th consecutive month as part of its efforts to reduce reliance on the US dollar, adding 29 tons in August bringing the total to 2,165 tons.
The gold market is experiencing selling pressure due to better-than-expected jobless claims data, easing fears of an economic slowdown and potentially leading to a longer maintenance of elevated interest rates by the Federal Reserve.
The dollar index has been on a sustained rally since mid-July, leading to a slight decline in gold prices due to the inverse relationship between the two, but gold has held up well despite the strength of the dollar.
The Bank of England's rapid pace of bond sales is causing concern among investors and creating a "selling gold at the bottom" moment, as the central bank unwinds its holdings and faces massive losses, while pushing down gilt prices and worsening losses for taxpayers. The pace of the sales is faster than that of other central banks and is reminiscent of the controversial gold disposal in the early 2000s, leading some to believe it could mark the bottom of the market, presenting an investment opportunity.
Gold prices rose on Monday, reaching their highest level in nearly two weeks, as the dollar weakened ahead of the U.S. inflation data, which could impact the Federal Reserve's interest rate decision.
Gold gained as the dollar weakened against the yuan due to positive China economic data, although the possibility of further U.S. interest rate hikes kept investors cautious.
The Federal Reserve is expected to hold off on raising interest rates, but consumers are still feeling the impact of previous hikes, with credit card rates topping 20%, mortgage rates above 7%, and auto loan rates exceeding 7%.
The Federal Reserve is expected to announce a pause on interest rate hikes due to positive economic indicators and the likelihood of a "soft landing" for the economy, but future decisions will be influenced by factors such as the resumption of student loan payments and a potential government shutdown.
The U.S. dollar is experiencing its first "golden cross" since July 2021, indicating potential upward movement and potential challenges for stocks, as it typically continues to climb for three months following this signal.