Gold Pushing Higher

Gold prices are on course to end the week firmly higher, bolstered by a weaker Dollar which fell as traders digested the latest Fed rate cut mid-week. Along with the .25% cut, Powell signalled that the bank would be watching incoming data and responding as necessary with expectations skewed towards likely further easing. Following the meeting USD weakened sharply yesterday in response to a surge in weekly jobless claims which printed 236k, up from 192k prior and above the 220k the market was looking for, raising fresh concerns over the health of the labour market.

US Jobs Data on Watch

Focus is now on next week’s delayed October and November NFP releases. Any fresh weakness in this data should see rate cut expectations lifting heavily, allowing gold to break out higher as USD selling intensifies. While the Fed noted that it expected incoming data to be somewhat distorted due to the impact of the US govt shutdown, the trend lower in jobs data ahead of the shutdown will provide worrying context for any fresh decline in the NFP. With a double release scheduled next week, there is a heightened volatility risk with gold prices poised for fresh record highs if data undershoots forecasts. On the other hand, any lift in the data could dilute near-term easing expectations, capping the rally in gold as USD recovers.

Technical Views

Gold

The rally in gold has seen the market breaking out of the bull triangle and above the 4,247.34 level. With momentum studies bullish, focus is now on a fresh test of the all-time highs around 4,383.16 with fresh highs eyed beyond. To the downside, the rising triangle trendline will be key support to watch if we correct lower.