GOLD Price Swings Amid Fed's Stance and Macroeconomic Indicators

2 พ.ย. 2023

Gold Price Swings Amid Fed's Stance and Macroeconomic Indicators

Gold price showcased a dynamic performance on Wednesday, flirting with the coveted $2,000 mark in anticipation of the Federal Reserve's policy announcements. During this time, the US Dollar faced headwinds due to sluggish US Treasury bond yields and a mixed market sentiment. However, a knee-jerk reaction followed the Fed's decision to maintain its policy rate within the 5.25%-5.50% range, causing Gold price to test the $1,970 round figure.

Technically, Gold remains within a bullish channel, targeting the $2,000 milestone with an extension potential to $2020.

Federal Reserve Chair Jerome Powell's press conference and his responses to inquiries became pivotal in reshaping the US Dollar's trajectory alongside US Treasury bond yields. While Powell did not rule out the possibility of another interest rate hike, his words were not as hawkish as expected by the markets. Powell acknowledged the presence of tighter financial conditions, a robust labor market, a resilient economy, and elevated inflation levels.

The sell-off in US Treasury bond yields was partially attributed to a quarterly Treasury announcement, revealing the government's intention to slow down increases in the size of its longer-dated auctions. The increase in the auction of 10-year Treasuries was $2 billion, falling short of market expectations, which had anticipated a $3 billion increase. This development led to a substantial drop of over 20 basis points (bps) in the benchmark 10-year Treasury bond yield, bringing it to 4.7089% - the lowest level in over two weeks.

In parallel, the US Dollar had to navigate mixed economic data. The US ADP private sector payrolls for October came in at 113,000, below the estimated 130,000. The US ISM Manufacturing Purchasing Managers' Index (PMI) for October slipped to 46.7, missing the expected 49.0. On the brighter side, the Job Openings and Labor Turnover Summary (JOLTS) report showed that the number of job openings in September was at 9.55 million, slightly up from the revised 9.50 million in August and surpassing the 9.25 million forecast.

As we step into Thursday's trading, Gold price is building on its previous recovery. Investors are carefully weighing the Federal Reserve's stance on interest rates, with expectations for a December and January rate hike being scaled back, and markets beginning to price in potential Fed rate cuts as early as June next year. This extension of the Fed-led risk rally in global stocks is likely to keep the safe-haven US Dollar on shaky ground. This sentiment shift is occurring despite the ongoing Hamas-Israel conflict, as the market's focus turns to Friday's US Nonfarm Payrolls data release.

Furthermore, Gold traders will be closely monitoring the Bank of England's (BoE) monetary policy decision scheduled for later in the day. The key rate is expected to remain unchanged at 5.25% for the second consecutive meeting. A dovish BoE pause is likely to inject fresh momentum into stocks, put downward pressure on the Pound Sterling, and relieve some of the pressure on the US Dollar. However, the daily technical setup indicates that upside potential remains strong for Gold price.



Our preference

Above 1960 look for further upside with 2000 & 2020 as targets.