- Summary:
- The market sentiment currently does not favour gold, with Fed rates unlikely to come in Q1, bolstered by last week's strong US jobs data.
Gold has started the week on a losing foot, trading at $2,022 per ounce at 11:12 CET on Monday. The commodity closed trading down 0.73% on Friday and looked on course to continue its losing streak, under pressure from a strong US dollar.
The US dollar is likely to continue its downward pressure on the yellow metal, as the current Fed rates of 5.25-5.5% are likely to remain in place at least until the end of the first quarter of the year. Furthermore, the US Nonfarm Payrolls printed at 353,000 jobs, beating the estimated 187,000 by far. This signals a strong US economy, which will likely keep investors away from the safe-haven gold.
Furthermore, the 10-year US treasury yields are up by over 4%, bringing more competition against gold. It gets worse for gold, as the prospect of a stronger stock market in the US also continues to attract more investors. In particular, the tech industry’s impressive results last week, headlined by Meta’s first-ever dividend issuance is an attractive preposition that many investors will find difficult to walk away from.
Meanwhile, gold could gain from rising tensions in the Middle East, with an uptick in US military strikes against Iran-backed Houthi Rebels. This upside view is emboldened further by suggestions that the much-awaited Israel-Hamas ceasefire hopes have hit a snag. The hot geopolitical environment could bring investor inflows to safe-haven gold. The alternative source of inflows is likely to come from investors looking away from China’s dwindling stock markets.
Technical Analysis
The market momentum currently favours downward movement, with the price likely to stay below $2,033. This would establish the first support at $2,016, beyond which the second one will come at $2,010. An unlikely upward movement above $2,033 will push the next resistance to $2,041, and a breach of this level could see the next resistance established at $2,047.
