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Gold price outlook mixed after blowout NFP report

Important elements of gold:

  • Gold Prices (XAUUSD) Extends gains, 1.6% per week.
  • NFP employment data All exceeded forecasts, adding pressure on the Fed.
  • As geopolitical uncertainty remains, haven bids are still in play

How to trade the impact of politics on global financial markets

Gold (XAUUSD) Earlier this week prices rose to a yearly low of USD1794.23, up 6.7%. Bullion rose 1.5% on Thursday and is heading for a run of three straight weekly gains after China fired missiles at Taiwan during military drills. Beijing has responded aggressively to the US House SA visit to the island this week by Nancy Pelosi, the highest-ranking American politician to visit the island in 25 years.

Gold (XAUUSD) Some have benefited from shelter support amid a weakening dollar, falling US bond yields and ongoing geopolitical risks. Bullish comments from Federal Reserve officials have vowed that the central bank will continue to fight aggressively to cool soaring inflation. Loretta J. Master, President Federal Reserve Bank Cleveland said on Thursday that the Fed would need to raise interest rates above 4% to bring inflation back to target. These comments had little impact on pricing of gold Demand continued as a haven.

Gold chart

Source: Bloomberg

Rising US job growth threatens to derail bullion rally

US employers added twice as much Forecast number of jobs, describing rock-solid labor demand that has eased fears of a recession and signaled steep interest rate hikes by the Federal Reserve to curb inflation. Treasury rates rose on bets that the Fed will continue to raise borrowing costs aggressively to cool demand and tame rampant inflationary forces.Stronger hiring conditions could prompt the Fed to press ahead with front-loading hike plans, which should ease worries that the economy is taking a nosedive. finishedA Rock It helps stabilize risk appetite in the near term Dham will soften demand and lead to a fall in gold prices.

With the Fed confirming its affinity for data-dependent decisions wE gets a better picture Inflation profile next week when the US Bureau of Labor Statistics releases the July Consumer Price Index. CPI rose 0.3% month-on-month, which The Annual rate Expect to fall 9.1% to 8.9% in the former month.

Geopolitical uncertainty remains

The fallout from US House Speaker Nancy Pelosi’s visit to Taiwan kept markets on edge for most of the week. Concerns eased somewhat after the tour, although China has begun military exercises in the vicinity of the island. In its biggest test in decades, China fired 11 Danfeng ballistic missiles into the waters around Taiwan. China’s Foreign Ministry on Friday announced new countermeasures against Washington, including suspending climate talks, cooperation in repatriation of illegal immigrants, legal assistance in criminal matters and combating domestic crimes. Should we see a continued escalation of tensions, we may see the asylum demand grow even stronger BYulian is likely to be one of the major winners.

XAUUSD D Chart

Gold

Source: Trading ViewPrepared by Zain Vavda

Final thoughts and next week

The market reaction following the NFP jobs report saw an immediate drop of USD26 in XAUUSD around U. S. DSince 1790 U. S. D1764 before rising high again. The 50-SMA As we traded between the 20s provided resistance and 50-SMA. The daily candle is poised to close as an inside bar bearish candlestick, hinting at further downside as we begin the new week. U. S. D1800 A major mental level Just above this week’s high.

As iInvestors and more importantly US Federal Reserve Keep monitoring the data closely and the sentiment is changing after every release by the minute, Next week’s inflation data is set Inflation is still uncomfortably high. In this case we could see a resurgent dollar which could lead to further trouble For precious metal.

— Written by Jain Vavda DailyFX.com

Connect and follow Zain on Twitter: @zvawda

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