Gold hovers around one-month high on weak data
2023-08-31
Summary:
Gold gained for a 3rd day, backed by weak economic data that might make the Fed lean towards a long-awaited pause.
Gold rose for a third straight session on Wednesday, supported by a fresh batch of weak economic data which could keep the Fed tilted towards a long-awaited pause.
Benchmark 10-year yields dropped to their lowest since August 11 while the dollar slipped to a two-week low.
US private sector added 177,000 jobs in August, well below the estimate for 195,000 and down sharply from July, according to ADP’s monthly report.
This Friday’s jobs report for August will be closely watched for further confirmation that the tightness in the labour market is ebbing.
Meanwhile second quarter growth rate has been revised down to a 2.1% annualised pace from 2.4% due to less inventory and non-residential fixed investment.
Bets on the Fed leaving rates unchanged in September rose to nearly 91%, from 88.5% before the data, while bets of a pause in November rose to nearly 59% from 52% a day earlier, according to the CME Group’s FedWatch tool.
Gold broke out from the upper end of the narrow channel which formed from late July before dipping into the area around the lows of June and July.
The precious metal is now trading around its one-month high but a climb back above 1,980 is needed to pave the way for a continued bullish run to retest 2,000 level.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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