Gold Retreats As Strong US Data Hint Small Rate Cut

Fundamental Analysis

* Smaller Cut: Gold prices have pulled back from recent highs following a stronger-than-expected US jobs report, suggesting the labor market remains robust. This strengthens the case for the Federal Reserve (Fed) to gradually ease its policy in 25-basis-point (bps) increments. The US Bureau of Labor Statistics (BLS) reported an impressive increase of 254,000 in Nonfarm Payrolls (NFP) for September, significantly exceeding the market’s expectation of 140,000. This solid labor data alleviates some pressure on the Fed, which already cut rates by 0.50% in September, as it seeks to fulfill its mandate of maximum employment. With this data, a 25 bps rate cut at the November meeting is widely anticipated, while only a small number of investors expect the Fed to keep rates unchanged.

Technical Analysis

* Technical Breakout: Gold price was traded lower following prior retracement from its recent high. MACD which illustrate ongoing bearish momentum signal suggest the commodity to likely further to extend its retracement.

*Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the support level 2625.00. Conversely, a potential reversal is also to be expected and the price could head back towards 2675.00.

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Potential Risks

Looking ahead, the US economic calendar will highlight key releases including inflation data, jobless claims, and the University of Michigan Consumer Sentiment report, which are expected to draw market attention this week. Furthermore, developments in the Middle East will also be closely monitored, as ongoing tensions could impact the performance of safe-haven assets like gold.

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Monitoring

Stay updated on US data, Middle East development, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.