Gold Pushing Higher Again

Gold prices are soaring higher on Thursday with the futures market back above the 4,200 level and retest of YTD highs in coming sessions. Fresh USD weakness in response to the ending of the record-long US govt shutdown has helped drive fresh demand for gold. The futures market is up almost 6% this week with four straight days of gains and shows no signs of slowing down. With the compromise bill passing through the House yesterday and signed into law by President Trump, the US govt funding has been restored and federal services are reopened. The focus now is on all the delayed data to come from over the shutdown period with headline focus on labour market and inflation data readings.

Dovish Data Expectations

The sell off in USD suggests that traders ware wary of fresh downside in these readings which should reboot December easing prospects. At the last FOMC meeting, Fed chair Powell warned that a December cut was not a done deal, citing uncertainty and division among policymakers given the lack of data available during the shutdown. However, with the delayed data due to come in the next week or so, this should clearly signal to traders how likely a further cut is.

NFP in Focus

If the two delayed NFP reports show weakness, this alone should be enough to cement a furtehr cut, keeping USD pressured lower near-term while gold prices should break out to fresh highs. As yet there has been no signal on when this delayed data is likely to arrive so traders will be watching for details on this schedule, though we should start seeing readings come through next week.

Technical Views

Gold

Gold prices have rallied firmly out of the corrective consolidation around the 4k mark. Price is now back up above the 4,200 level and look set for a fresh test of YTD highs soon with the 2.618% Fib level at 4,505.35 the next target for bulls.