Gold Price was able to recover nearly half a percent on Thursday after a volatile reaction following the release of US inflation and jobs data.
Gold for December delivery was last seen up US$13.60 to US$2,639.60 per ounce.
Although the inflation data revealed upside price pressures, the labor market data was weaker than expected, and – given the Federal Reserve’s avowed prioritization of employment security over fighting inflation – suggests a greater chance the bank will maintain a pro-easing stance.
This, in turn, suggests it will go ahead and cut interest rates at its next policy meeting and lower interest rates are bullish for Gold as they reduce the opportunity cost of holding the non-interest paying asset.
Gold springs back into the “green” after intially selling of on Thursday following the release of US data.
The precious metal initially dipped after the US Consumer Price Index (CPI) showed a rise 2.4% annually in September, which was lower than the 2.5% in August but higher than expectations of 2.3%, data from the Bureau of Labor Statistics showed.
CPI ex Food and Energy rose 3.3% annually in September, which was higher than the 3.2% in August and beat expectations of 3.2%, also showing sticky inflationary conditions.
On the Jobs front, however, it was a different story, and Gold rallied back into positive territory after US Initial Jobless Claims in the week ending October 8 raised by 258K, which was above the 225K of the previous week and beat expectations of 230K.
Continuing Claims for week ending September 27 stood at 1.861 million, which was higher than the revised down 1.819M and the 1.83M expected. Overall the data showed some weakness creeping into the jobs market which is likely to keep the Fed on track to cut interest rates (to stimulate borrowing) at its November policy meeting.
Federal Reserve Bank of San Francisco President Mary Daly (voting member) said on Wednesday that one or two more rate cuts were needed before the end of the year, adding, “I was more worried about the labor market,” than “accelerating inflation.
The market-based probability of the Fed lowering by 50 bps (0.50%) remained at zero following the release, according to the CME Fedwatch tool. At that time, the probability of a drop of 25 units per second is 89% lower, which is slightly higher than the previous data. In addition – since the inevitable big cut – the odds that the Fed will do nothing in November drop to 11%.
Technical Outlook – Gold Price
Gold prices posted an intraday gain of nearly 0.5%, reaching an intraday high of ₹75,413 before settling at ₹75,297, up from the previous session’s close of ₹74,934.
Since October 4, 2024, the price trajectory has turned bearish, correcting from a swing high of ₹76,630 to a recent low of ₹74,757. However, a rebound from this low led to a close above the prior day’s level.
The intraday price action resulted in the formation of a high wave candlestick, indicating potential momentum reversal. To confirm bullish continuation, prices need to break above the immediate resistance level at ₹75,450, which could pave the way for a move toward ₹75,800–₹76,200.
On the downside, crucial support is located at ₹74,680. A decisive break below this level could accelerate the decline towards ₹74,000–₹73,500.
Happy Trading!
Commodity Samachar Securities
We Decode the Language of the Markets
Also Read: US PPI, UK GDP data in Focus today Nifty’s Range-Bound Riddle : Will It Fall or Soar?
Recommended Read: Breaking Down 5 Technical Analysis Myths: Let’s Get the Facts Straight!
Want Help On Your Trades ?
Chat With RM