admin Gold futures finished lower last week after toying with a potential upside breakout early in the week. Buyers eventually succumbed to a stronger U.S. Dollar, which dampened demand for the dollar-denominated asset. The catalysts behind the selling pressure were stronger-than-expected U.S. economic data and an optimistic outlook for U.S.-China trade relations. Traders showed little reaction to the impeachment inquiry on President Trump
Last week, December gold futures settled at $1506.40, down $8.70 or -0.57%.
Early last week, gold futures climbed to their highest level in nearly three-weeks as calls for impeachment proceeding against U.S. President Donald Trump pushed stocks into the red. Gold received a further boost from disappointing consumer confidence data.
At mid-week, gold prices began to retreat, losing as much as 3% in one session, as political uncertainties in the United States stemming from an impeachment inquiry into President Donald Trump drove investors into the safety of the dollar, limiting the bullion’s appeal. Trump helped drive prices even lower after he said a trade deal with China could happen sooner than expected. This came just a day after he said he would not accept a “bad deal” in the negotiations.
After a sideways trade on Thursday, sellers returned on Friday to drive gold prices into their low of the week. The market eventually finished its worst week in six months as the U.S. Dollar hit a multi-week high on doubts whether the U.S. Federal Reserve will cut interest rates again in October.
Gold bulls are worried because Federal Reserve easing is being called into question as many Fed officials are saying that maybe the economy doesn’t need as much ongoing stimulus.
On September 25, Dallas Fed President Robert Kaplan said even though the world economy was going through a “fragile” period, odds of a U.S. recession over the next year remain “relatively.”
On September 26, Fed Vice Chair Richard Clarida said U.S. inflation expectations are currently in line with the central bank’s 2% goal, an indication that he does not see a pressing need for new rate cuts to boost inflation.
This week, gold investors face a slew of economic data and Fed speakers that should determine whether the central bank cuts its benchmark rate at the end of October of not. Bullish data and hawkish Fed speakers should put pressure on gold.
The key reports to watch are ISM Manufacturing PMI. It is expected to come in at 51.0, just above the 50.0 benchmark level.
ISM Non-Manufacturing is expected to come in at 55.1, slightly below the previously reported 56.4.
On Friday, traders will get the chance to react to the September U.S. Non-Farm Payrolls report. The Non-Farm Employment Change is expected to show the economy added 140K jobs last month. This is up slightly from the previously reported 130K. Average Hourly Earnings are expected to have risen 0.3% and the Unemployment Rate is expected to hold steady at 3.7%.
As far as the markets are concerned, the U.S. Dollar is exerting the biggest influence on gold prices because of its safe-haven appeal and the relative strength of the U.S. economy over other global economies.
Source: fxempire.com
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