Gold price forecast

Islam Saeed wrote Tuesday, August 08, 2023 12:00 AM I fell back gold prices Yesterday, Monday, at the start of the week’s trading, with the US dollar gaining some strength in preparation for this week’s inflation report, but gold prices moved away from their lowest levels in three weeks after job growth slowed in the United States, which caused bond yields to decline from their recent highs.

Spot gold prices decreased at the beginning of the week’s trading by 0.3%, to trade at the time of writing the technical report for Gold Billion at the level of $1934 an ounce. This comes after gold prices rose last Friday by 0.4%, moving away from the lowest level recorded in 3 weeks at $1925 an ounce.

The decline in the number of new jobs in the United States during the month of July contributed to the rise in gold prices last Friday, to close the week’s trading above the level of $1940 an ounce, but today, prices return to a decline to trade in a critical area before the issuance of the inflation report next Thursday.

The government jobs report for the non-agricultural sector for the month of July witnessed the registration of 187 thousand jobs, less than expectations at a value of 205 thousand, and the previous reading was revised negatively to 185 thousand jobs, after it was 209 thousand jobs.

Also, wages continued to rise at a steady rate, as the average hourly earnings index increased by 0.4%, unchanged from the June reading, which indicates the great cohesion of the American employment sector, despite the decline in the number of new jobs.

The unemployment rate fell over the past month to 3.5% from 3.6% in June, the lowest levels of unemployment in the United States in more than 50 years.

The jobs report was mixed to a large extent, as the decline in the number of new jobs indicates the need for the Federal Reserve to end the cycle of raising interest rates, but the wage pressures that continue to increase on the other hand indicate that investors should watch the risks of inflation in the future and thus the possibility of raising interest rates, according to Gold Bellion Analysis.

Today, the US dollar rose again in preparation for the inflation data that will be issued later this week, after a record performance of the federal currency during the past three weeks, during which it rose by 2.2%, according to the dollar index, which measures its performance against a basket of 6 major currencies.

While the dollar rose today by 0.2%, following the decline it recorded at the end of last week following the jobs report data, it is noteworthy that the dollar’s rises during the last period coincided with the rise in US government bond yields.

During the past week, the yield on 10-year bonds increased by 2.1%, during which it recorded the highest level since November 2022 at 4.222%. The yield was able to stabilize above the 4% level, even after the decline it recorded following the jobs data.

The focus point during this week will be consumer price data, which is the main inflation indicator in the markets. The annual index for July is expected to rise by 3.3%, higher than the previous reading of 3%. The annual core index is expected to record 4.7% from the previous reading of 4.8%. .

Conflicting expectations of Fed members

After the issuance of the latest US jobs data, some members of the Federal Reserve announced their expectations for the future of interest rates according to these data. The contradiction appeared in their statements, which indicates that the latest jobs report did not succeed in imposing a unified approach for all.

Fed member Rafael Bosti indicated that the Federal Reserve should hold interest rates at their current levels for a longer period of time without the need for further rate hikes after a moderate decline in the labor market, and showed his satisfaction with the recent jobs data and that inflation rates are on their way to decline to the bank’s target of 2%.

Fed member Austin Goolsby’s statements came in agreement with this as well, as he indicated that the job data shows a moderate decline indicating the stability of the employment sector, and said that the focus should be on the duration of fixing interest rates at their highest rates.

As for Fed member Michelle Bowman, she stated that there may be a need for more rate hikes to ensure that the bank’s target is reached, and that the Fed needs consistent evidence of a stable decline in inflation until the bank’s target is at 2% to determine the required rate hike rate and the period of interest stability after that at the highest level. their rates.

2023-08-07 21:00:00
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