Gold Sinks On USD Rebound
Gold Crashing Lower
Gold prices are plunging midweek as the resurgence in USD continues to weigh on demand for the yellow metal. We’ve seen a heavy hawkish repricing in traders’ Fed expectations on the back of Fed chair Warsh’s Jackson Hole speech last week. Warsh warned that the Fed would likely need to raise rates further given the lack of progress on inflation. Given the three dissenting votes in favour of a hike at the July meeting, traders judge that Warsh’s comments likely reflect a further strengthening of that hawkish base. CME group is now pricing a September hike at 70% up from around 30% prior to those comments.
Jobs Data on Watch
Incoming jobs and inflation data ahead of that September meeting are now seen as the only potential barriers to a September hike. With that in mind, this week’s US jobs data will prove key for near-term USD (and, consequently, gold) direction. Both today’s ADP print (exp 44k) and Friday’s NFP release (exp 55k) have strong potential for an upside surprise given the low estimates. If seen, this should drive September tightening expectations higher, pushing USD further north and gold further south. However, if the NFP comes in on the soft side on Friday, this should create deeper uncertainty with gold to rally as tightening expectations, and USD, cool.
Technical Views
Gold
Gold prices have fallen heavily over the last week with the futures market now back under the 4,389.24 level from highs around the 4,700 level previously. With momentum studies bearish, focus is on a further push lower near-term with 4,204 the next support to watch ahead of the deeper 4,092 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.