The Gold Price Soared To Unseen Highs Amid High US Yields, Unfazed By US Jobs Data -

The Gold Price Soared To Unseen Highs Amid High US Yields, Unfazed By US Jobs Data

Apr 07, 2024Jeremy ParkinsonFinance0

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Gold hit record highs on Friday, defying the US Nonfarm Payrolls spike and the US dollar’s gains, further highlighting the yellow metal’s safe-haven status.

The Fed rate cut outlook was adjusted after employment data was released and the central bank’s remarks were made.

Geopolitical tensions and strong demand from China bolstered gold’s market strength.

Gold rallied to a new all-time high on Friday, ignoring a strong March Nonfarm Payrolls report in the United States, which could prevent the Federal Reserve from slashing rates sooner than the market expects. In achieving its milestone, the yellow metal ignored the rise in US Treasury yields and the greenback, which boasted modest gains of 0.09%.The XAU/USD cross was seen trading at around $2,324 after reaching $2,330 earlier in Friday’s North American session. The price of gold continued to be driven by fundamentals linked to the US dollar, geopolitical risks, and physical demand.Focusing on data, US Nonfarm Payrolls figures for March crushed estimates and February’s numbers, as new hirings rose to 303,000. Consequently, the Unemployment Rate fell, while Average Hourly Earnings were mixed, rising on monthly figures but diving on an annual basis.Following the data, bets that the Fed would cut rates in June fell further, from around 70% a week ago to 53.4%, according to the CME FedWatch Tool.The employment report reinforced Fed Chair Jerome Powell’s words on Wednesday. He said they’re in no rush to cut rates, and his words echoed throughout the week. On Friday, officials crossed the wires led by Richmond’s Fed Barkin, Dallas Fed Logan, and Governor Bowman.

Market Movers: Gold Underpinned by Strong Physical Demand, Ignored US Data

The US Department of Labor announced that Nonfarm Payrolls increased by 303,000 in March, higher than the anticipated number of 200,000 and the previous reading of 270,000.

Further details revealed that the Unemployment Rate decreased modestly to 3.8% from 3.9%, with Average Hourly Earnings meeting consensus predictions. Average Hourly Earnings rose by 0.3% month-over-month, up from 0.2%. In the twelve months to March, earnings rose by 4.1% as expected, down from 4.3%.

Following these figures, the US dollar strengthened, evidenced by a 0.15% rise in the US Dollar Index (DXY) to 104.36. US Treasury bond yields increased by about 5 basis points, with the 10-year rate reaching 4.365%.

Recently, Fed Governor Michelle Bowman stated that cutting rates too soon risks a rebound in inflation. She said that eventually, the bank would cut rates, yet inflationary risks are tilted to the upside. Earlier, Richmond Fed President Thomas Barkin described the NFP report as robust, but noted that inflation reduction has been inconsistent.

Dallas Fed President Lorie Logan said there’s “no urgency” to cut borrowing costs, adding the risk of cutting too soon is higher than being late.

Geopolitical risks loomed following Israel’s attack on Iran’s embassy in Syria. Iran pledged to retaliate against Israel after seven officers were killed. A further escalation could pressure gold prices upward, as traders were looking at the $2,350 figure.

The World Gold Consortium revealed that the People’s Bank of China was the largest buyer of the yellow metal, increasing its reserves by 12 tonnes to 2,257 tonnes.

Technical Analysis: Gold’s Upside Looked Set to Continue Despite RSI’s Overbought Condition
Gold’s rally appeared set to continue, as buyers were gathering momentum on Friday. The Relative Strength Index (RSI), although at overbought conditions past the 70.00 level, aimed north. Usually when an asset has a strong uptrend, the 80 reading is seen as the overbought extreme. However, as price action doesn’t show signs of exhaustion, the $2,350 mark could up for grabs.On the flip side, the first support level would be the $2,300 figure. A breach of the latter would expose the $2,250 level, followed by the $2,200 mark.More By This Author:GBP/JPY Price Analysis: Climbed, But Buyers Targeted 191.00
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