At the beginning of the Asian market on Friday (March 8), spot gold fluctuated within a narrow range and was currently trading around $2,159.41 per ounce. Gold prices continued their gains on Thursday, with spot gold once again reaching a record high of $2,164.65 per ounce and closing at $2,159.80 per ounce, marking its seventh consecutive day of gains. It was affected by soft U.S. economic data and dovish speeches by Federal Reserve Chairman Powell. Support, central bank buying and safe-haven demand have also brought continued benefits to the gold market.
Powell signaled on Wednesday that he could cut interest rates in the coming months if inflation eases. Betting on the U.S. monetary easing policy continues to increase, and central bank buying and safe-haven demand have brought continued benefits to the gold market.
"We are waiting to have more confidence that inflation will continue to fall back toward 2 percent," Powell said at a Senate Banking Committee hearing on Thursday. "When we have that confidence, it will be appropriate to begin to reduce the level of policy restrictions so that we It’s not going to push the economy into recession. We’re not far away from that.”
Marc Chandler, chief market strategist at Bannockburn Global Forex, said, "Powell seems to be more dovish today than yesterday."
Chandler said rising investor interest in riskier assets, including stocks, also weighed on the dollar.
The U.S. dollar index (102.7413, -0.0656, -0.06%) fell sharply on Thursday, hitting as low as 102.80, a new low since January 24. It closed at 102.83, a decrease of about 0.54%, marking the fifth consecutive trading day of decline.
The Chicago Mercantile Exchange's Fedwatch tool shows that traders currently believe that the probability of the Federal Reserve cutting interest rates in June is 74.8%, compared with about 63% on February 29.
Joseph Cavatoni, market strategist at the World Gold Council, said interest rate cut bets are driving gold prices and everyone is looking forward to the rate cut. Cavatoni added that gold buying by central banks also continues to be strong.
Friday’s U.S. nonfarm payrolls
The employment report may provide further guidance to the market. According to a survey of economists, non-farm payrolls were expected to increase by 200,000 last month after increasing by 353,000 in January.
The labor market is steadily relaxing, which may ease some inflationary pressures and provide data support for the Federal Reserve to cut interest rates. U.S. Labor Department data showed Thursday that initial jobless claims remained at a seasonally adjusted 217,000 in the week ended March 2. Economists expected 215,000, after the previous week's figure was revised up from 215,000 to 217,000.
In addition, data also showed that in the week ending February 24, the number of people continuing to receive unemployment benefits increased by 8,000 to 1.906 million, the highest level since November last year.
In the physical market, soaring prices are expected to curb consumption during India's wedding season, but top buyer China is likely to see strong safe-haven demand.
HSBC precious metals analyst James Steel said geopolitical risks are also a major driver of gold.
Marcus Garvey, head of Macquarie's commodity strategy team, pointed out that slightly weaker U.S. data gave gold a reason to rise, but the fluctuations seemed too large, possibly due to the large amount of futures buying that started on Friday.
Macquarie's Garvey said if Friday's job market data or next week's inflation data show any weakness, $2,300 would be a short-term target based on technical levels, but it would be a fairly short-lived blip and then Prices will correct and consolidate.
On Thursday, the European Central Bank decided to keep interest rates unchanged and issued tough remarks, led by European Central Bank President Lagarde. While she prepared for possible policy changes, she ignored a possible rate cut at the April meeting, although the June meeting looked likely.
Joseph Cavatoni, market strategist at the World Gold Council, said interest rate cut bets are driving up gold prices and everyone expects a rate cut to come. Cavatoni added that gold buying by central banks also continues to be strong.
Jigar Pandit, head of commodities and currencies at Sharekhan at BNP Paribas, said, "We expect central banks to continue buying amid geopolitical uncertainty. Slowing economic growth in Asia's largest economies will dampen global economic growth. Therefore, amid uncertainty In the current financial environment, gold will remain a safe investment for banks."
In terms of the geopolitical situation, Hamas left Gaza ceasefire negotiations in Cairo on Thursday, with no progress made in the negotiations just days before Ramadan, while the United States said that Hamas was responsible for reaching an agreement on the Israeli hostage issue.
HSBC precious metals analyst James Steel said geopolitical risks are also a major driver of gold prices. “We only have a small subset of assets that investors can truly call safe havens, and gold is number one.”
Wayne Gordon, strategist at UBS Global Wealth Management, said, "From a fundamental perspective, not everything is positive. Gold prices are obviously driven by other factors." Although gold ETFs experienced net outflows, many other reasons supported gold prices. The rise includes continued purchases of gold by central banks in major Asian countries and retail investors in countries such as India.
Gordon said, "We believe that there are more technical factors at work recently, and gold prices have crossed key resistance levels. Increasing attention on the U.S. presidential election, continued central bank buying, and still relatively benign speculative positioning indicate that gold is still relatively benign." This round of gains will continue further in the medium term, especially if ETF buying returns."
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2024-03-08
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