Gold Rally Races On
Gold prices continue to soar further into fresh record highs this week. The triggering of a federal government shutdown in the US and the consequent sell-off we’re seeing in USD has sparked deeper demand for gold as traders rush into the safe-haven asset to avoid a tumbling US Dollar. With no view yet on when the shutdown is likely to end there are fears that this could turn into a deep standoff between Republicans and Democrats, causing heavy economic pain to the US. Each day the shutdown continues, gold prices are likely to push further higher, creating a firmly bullish near-term outlook for the safe-haven asset.
US Data Issues & Fed Expectations
Looking ahead, the focus will now be on today’s US data with the ADP jobs figure and ISM manufacturing print due. Given that Friday’s headline NFP data set will now be postponed because of the shutdown, these readings will take on greater importance, and any weakness should drive gold higher today as USD slides deeper. With the October NFP now set to be heavily impacted by the shutdown, the market will no doubt turn more dovish on the Fed, putting greater pressure on USD as traders anticipate fresh easing from the Fed. Indeed, pricing for a cut this month and a follow-up cut in December has risen today reflecting these dovish expectations.
Technical Views
Gold
The rally in gold has seen the market breaking out above the 1.27% fib extension around 3,795.33. Price is now fast approaching a test of the 1.61% extension and the 4k handle. With momentum studies bullish, focus is on a continuation higher while we hold above the 3,652.34 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.