On Thursday, August 1, spot gold closed down 0.5% at $2,432.19 per ounce. During the New York trading session, weaker-than-expected US employment data boosted hopes for a rate cut, which initially pushed gold prices up by over 1% to touch a two-week high of $2,477 per ounce, but later encountered profit-taking pressure and underwent a pullback during the closing stage.
Friday's US non-farm payrolls report showed that job growth in July was far below expectations, with only 114,000 jobs added, while the unemployment rate unexpectedly rose to 4.3%. The release of this data immediately sparked concerns about the health of the US economy in the market, and also strengthened expectations of a future rate cut by the Federal Reserve (Fed). The results of the data lowered the benchmark US 10-year Treasury yield to its lowest level since December, and the US dollar touched its lowest since March. After the data was released, the CME FedWatch Tool showed that traders currently believed there was a 71% chance that the Fed would cut rates by 50 basis points in September, higher than the 31% before the data was released and the 22% on Thursday. Traders have fully digested expectations of at least a 25 basis points rate cut in September, and now expect a total of 116 basis points of rate cuts before the end of the year. In theory, the increased expectations of a rate cut by the Fed should make gold more attractive to investors. Chief Operating Officer of Allegiance Gold, Alex Ebkarian, said, "At current levels, we do expect some pullback and profit-taking, but from a fundamental standpoint, the upside potential is much greater than the downside risk."
Source: E-huitong
From a technical standpoint, observing from the daily chart, gold seems to have entered a flag consolidation phase during an upward trend. After hitting a yearly high last Friday, the bullish momentum continued to push higher, but then encountered profit-taking resistance and underwent an adjustment. However, technical indicators have not shown a weakening signal, and the support level of gold has moved up, indicating that the bullish strength of gold is still holding. If the price stabilizes above the key psychological level of $2,400 in the future, further gains in gold can still be expected. In the short term, caution should be exercised to guard against the risk of volatility in the struggle between long and short positions.
Wang Gang, Bank of China Guangdong Branch
For personal views only, not representative of the views of the organization.