- Summary:
- Barring an escalation of war in the Middle East, gold price will likely be swayed by US macroeconomic news. That, too, spells bullishness
Gold prices stayed up on Friday as the market reacted to mixed data from the US economy. The yellow metal traded at $2,639 per ounce at the spot market, up by 0.4 percent at the time of writing, after the monthly US consumer inflation data and unemployment figures failed to give the dollar a decisive signal.
Gold snapped a six-session losing streak on Thursday and extended its gains on Friday as more traders bet on another interest rate cut by the Federal Reserve in November. The CME FedWatch Tool indicated that 84 percent of traders expect the Fed to slash borrowing cost by 25 basis points next month.
US Consumer Price Index (CPI) remained unchanged at 0.2 percent in September, beating the forecast estimate by 0.1 percent. However, the annualised figure came in at 2.4 percent, declining from August’s 2.5 percent, but exceeding the forecast estimate by 0.1 percent. The Core CPI (excluding food and energy prices) remained unchanged from August’s 0.3 percent, but beat the forecast rate of 0.2 percent. The annualised equivalent came in at 3.3 percent, above the forecast 3.2 percent.
Meanwhile, the US labour market continued to underperform. Initial Jobless Claims figures rose to 258k in the week ending October 3 from the previous week’s 225k, which was substantially above analysts’ median figure of 231k. This has added to the perception that the US economy could be strained, hence justifying the need for another interest rate cut.
Elsewhere, gold price also has support from US treasury bonds. Benchmark 10-year bonds have seen their yields fluctuate within narrow margins of 4.0 percent, easing pressure on non-yielding gold. The Middle East war is also a factor in all this, but the market seems to have locked in the geopolitical risk premium. Barring an escalation of the war, volatility will likely focus on the US macroeconomic pronouncements.
Gold price prediction today
The momentum on gold price calls for further upside above the 2,620 pivot mark. The bullish momentum will likely encounter the first resistance at 2,635. However extended bullishness could see that mark becoming a support. In that case, XAUUSD price could register further gains to test 2,645.
On the downside, the bears could take control if gold price breaks below 2,620. If that happens, initial support could be established at 2,614. However, a stronger bearish momentum could break below that level to invalidate the upside narrative and potentially result in further losses to test 2,610.
