Gold prices fell sharply this week as pressure from rising US Treasury yields, a stronger dollar, and expectations of further interest rate hikes by the Federal Reserve outweighed safe-haven demand. Even the weaker-than-expected jobs report released on Friday failed to provide sustained upward momentum for the precious metal.
Spot gold prices started the week at $4,277.90/oz on Sunday evening. On Monday, gold experienced a brief rally, reaching a weekly high of $4,280.56/oz, before selling pressure prevailed. The decline accelerated as oil prices rose due to continued inflation concerns stemming from the US- Iran conflict, while rising yields on long-term US Treasury bonds and a stronger dollar dampened demand for non-yielding assets.
Gold prices sought to stabilize on Tuesday after U.S. jobs data showed signs of cooling and consumer confidence weakened. However, the recovery remained limited as the market continued to factor in the risk of the Fed implementing another interest rate hike.
Selling pressure returned on Wednesday as the US dollar remained near its two-month high and US Treasury yields stayed high, keeping spot gold prices pegged near the lower end of their recent trading range.
Precious metals received only limited support on Thursday, before falling to a weekly low of $4,110.95/oz as traders adjusted their positions ahead of the September jobs report.
Payroll data released on Friday provided the first significant support for gold this week. The US economy added only 29,000 jobs, the unemployment rate rose to 4.2%, while July and August jobs figures were revised downwards. These figures dampened expectations of a Fed interest rate hike in October, simultaneously dragging down the dollar and bond yields.
However, after failing to maintain above $4,200/oz, spot gold prices quickly fell sharply again for the remainder of Friday's session. The precious metal ended the trading week only about $15 higher than its session low, before heading into the weekend.
Kitco News' latest weekly gold survey shows that experts are moving closer to a bearish majority, while individual investors have shifted away from the bullish outlook they held since the end of July.
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| Source: Kitco |
In the Kitco survey, out of 13 experts, 3 (23%) predicted a rise in gold prices, 6 (46%) predicted a fall, and the remaining 4 (31%) said it was difficult to predict the direction of gold or expected prices to fluctuate sideways next week.
Meanwhile, a survey of 182 individual investors showed that 85 (47%) expect prices to rise, 60 others (33%) predict a price drop, and the remaining 37 investors (20%) predict gold prices will remain stable next week.
Marc Chandler, managing director of Bannockburn Global Forex, is one of the experts leaning towards the possibility of gold prices rising next week. According to him, signals from Fed leaders, including Jefferson and Williams, suggest the Fed may be more patient than the market regarding raising interest rates in October, while weak US jobs reports further reinforce this possibility.
Lower interest rates supported gold ahead of the weekend, helping prices regain the $4,200/oz mark. Chandler suggests that a break above the $4,280-$4,300/oz range would provide further grounds for believing that a bottom has been formed.
Also anticipating that the Fed may not rush to further tighten policy, Rich Checkan, President and Chief Operating Officer of Asset Strategies International, believes that weak employment data has given gold further impetus. According to him, although a strong US dollar and high US Treasury yields continue to put pressure on the precious metal, the jobs report, along with comments from New York Fed President Williams that there is no need to rush to raise interest rates, is leading the market to expect the Fed will not raise rates in October. This could be a factor contributing to further increases in gold prices.
However, the likelihood of gold sustaining a significant recovery remains uncertain. Adam Button, Head of Currency Strategy at investingLive, maintains a neutral stance and says he is looking for buying opportunities in October before entering the November-January period, when seasonal factors are more favorable.
Sean Lusk, co-director of commercial hedging at Walsh Trading, also holds a neutral view. According to him, October typically has a favorable period lasting about three to four weeks, which could bring gold prices back to the $4,400-$4,500/oz range.
However, the performance of gold after the jobs report left Mr. Lusk unconvinced about the recovery. He expressed disappointment that gold could not maintain its upward momentum despite weak payroll data reducing the likelihood of the Fed raising interest rates. According to him, in the context of falling crude oil prices, rising stocks, and a pressured dollar, gold should have been supported, but the initial positive reaction quickly faded as yields rose again.
What worries Sean Lusk more is that gold is reacting negatively to news that was previously seen as supportive of prices. According to him, this indicates that upward movements are becoming increasingly difficult to sustain. Therefore, while the October seasonal factor may create an opportunity for recovery, he believes it's necessary to wait for the market to stabilize after the weekend and monitor further geopolitical developments before making a clearer assessment of the outlook for next week.
This caution is more pronounced among experts forecasting continued pressure on gold prices. Adrian Day, President of Adrian Day Asset Management, believes that the next move for gold is likely to be a decline. According to him, the precious metal is showing remarkable resilience against high yields, strong oil prices, and a rising US dollar – a combination that would normally create significant headwinds for gold. However, Day suggests the decline may not last, as the end of the war could cause the US dollar to resume its downward trend, while the Fed's pause on interest rate hikes could provide some support for gold.
Meanwhile, Daniel Pavilonis, a senior commodities broker at StoneX Group, focused more on yield movements. According to him, the US government's announcement of releasing oil from strategic reserves to help curb diesel and gasoline prices was the main reason gold failed to rise after the non-farm payrolls report. Following this news, interest rates rose again and commodities broadly declined.
Pavilonis believes that the upside potential for precious metals remains limited as long as yields do not fall significantly. Therefore, he forecasts that gold prices are likely to continue falling next week, or at least remain weak.
Leaning toward a bearish scenario, Alex Kuptsikevich, senior market analyst at FxPro, noted that gold has fallen in 5 out of the last 6 weeks, at one point dropping below $4,100/oz, while subsequent recovery attempts have been met with selling pressure around $4,200/oz. According to him, investors appear to be shifting capital from gold to bonds following sharp sell-offs in the US and European government bond markets.
Alex Kuptsikevich suggests that if bond yields continue to rise, the US dollar strengthens, and the stock market weakens, gold could face further pressure and retest the $4,000/oz level. Conversely, timely measures from Europe could restore interest from speculators and investors, thereby paving the way for a new wave of gold price increases.
Next week will be relatively sparse on economic data, but traders will still be watching key indicators on the services sector and consumer confidence, as well as the minutes of the September meeting of the Federal Open Market Committee (FOMC), where the Fed agreed to raise interest rates.
With limited economic data releases, economists predict that prominent geopolitical risks will dominate price movements. Several key economic reports that could cause market volatility include the Institute of Supply Management (ISM) Services Purchasing Managers' Index (PMI), the minutes of the Fed's September monetary policy meeting, and the University of Michigan's preliminary consumer confidence survey.
On Monday morning, the ISM will release the September services PMI. Following the weak payroll data, economists will be paying particular attention to the employment component of this report.
By Wednesday afternoon, traders will be scrutinizing the minutes of the Fed's September monetary policy meeting for clues about the correlation between the "hawkish" and "dovish" views within the FOMC.
On Thursday morning, weekly jobless claims data will be released. The trading week closes Friday morning with the University of Michigan's preliminary October consumer confidence survey.
Source: https://thoibaonganhang.vn/gia-vang-tuan-toi-phuc-hoi-hay-tiep-tiep-chiu-suc-ep-188430.html
