Gold Spot / U.S. DollarUpdated Gold Market Analysis
The price of gold (XAU/USD) has consolidated around $1,985 in early Friday trading. The lower yields on US Treasury bonds and a softer US dollar (USD) are providing positive momentum for the precious yellow metal. However, market participants may exercise caution ahead of the highly anticipated US Non-Farm Payrolls (NFP) report on Friday, expected to show an increase of 180,000 jobs in October.
Meanwhile, the US Dollar Index (DXY), measuring the value of the USD against a basket of global currencies, is hovering around 106.17 after rebounding from this week's low of 105.81. Yields on US Treasury bonds have declined, with the 10-year Treasury yield at 4.663%, the lowest since September 13.
The market is confident that the Federal Reserve (Fed) is nearing the end of its tightening cycle, as Fed Chairman Jerome Powell made it clear that financial conditions will need to tighten to prevent further interest rate hikes. This, in turn, is weighing on the greenback and supporting gold priced in USD.
On the other hand, optimistic data from China could limit the upward potential of the precious metal, as China is the world's largest producer and consumer of gold. Traders are awaiting China's Caixin Services PMI for May. Weaker-than-expected data could raise doubts about the second-largest economy's recovery. Earlier this week, China's Caixin Manufacturing PMI fell to 50.6 in October from 51.3 in the previous month, falling short of expectations.
Attention on Friday will be focused on the US Non-Farm Payrolls data. Additionally, the Unemployment Rate and Average Hourly Earnings for October will be released. Traders will closely monitor these data points to identify trading opportunities in the gold market.
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Meanwhile, the US Dollar Index (DXY), measuring the value of the USD against a basket of global currencies, is hovering around 106.17 after rebounding from this week's low of 105.81. Yields on US Treasury bonds have declined, with the 10-year Treasury yield at 4.663%, the lowest since September 13.
The market is confident that the Federal Reserve (Fed) is nearing the end of its tightening cycle, as Fed Chairman Jerome Powell made it clear that financial conditions will need to tighten to prevent further interest rate hikes. This, in turn, is weighing on the greenback and supporting gold priced in USD.
On the other hand, optimistic data from China could limit the upward potential of the precious metal, as China is the world's largest producer and consumer of gold. Traders are awaiting China's Caixin Services PMI for May. Weaker-than-expected data could raise doubts about the second-largest economy's recovery. Earlier this week, China's Caixin Manufacturing PMI fell to 50.6 in October from 51.3 in the previous month, falling short of expectations.
Attention on Friday will be focused on the US Non-Farm Payrolls data. Additionally, the Unemployment Rate and Average Hourly Earnings for October will be released. Traders will closely monitor these data points to identify trading opportunities in the gold market.
Thank you for reading. Have a great day!
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