Gold price rises again- Will it go higher above expectations?

Gold price rises again- Will it go higher above expectations?

The gold price jumped to a new all-time high last week. Prices rose sharply even after the March report on non-farm payrolls in the US, which could prevent the Federal Reserve (Fed) from cutting interest rates faster than the market expects.

The yellow metal ignored the rise in US Treasuries and of the Green Bill, which keeps a modest 0.09 percent increasing.

Focusing on the data, the US farm payrolls numbers released in March beat estimates, and the number of new hires rose to 303,000 in February. As a result, the unemployment rate fell, while average hourly wages fluctuated, rising monthly but falling annually.

The jobs report confirmed what Federal Reserve Chairman Jerome Powell said on Wednesday. He said they were in no rush to cut rates, and his words echoed throughout the week. On Friday, officials transferred from Richmond Fed Barkin, Dallas Fed Logan and Governor Bowman.

US Department of Labor announces that Nonfarm Payrolls increased by 303,000 in March, higher than the anticipated 200,000 and the previous 270,000.

Further details revealed that the Unemployment Rate decreased modestly to 3.8% from 3.9%, with Average Hourly Earnings meeting consensus predictions. Average Hourly Earnings rose by 0.3% MoM, up from 0.2%. In the twelve months to March, earnings rose by 4.1% as expected,  down from 4.3%.

Following these figures, the US Dollar strengthened, evidenced by a 0.15% rise in the US Dollar Index (DXY) to 104.36. US Treasury bond yields increased by about 5 basis points, with the 10-year rate reaching 4.365%.

Recently, Fed Governor Michelle Bowman stated that cutting rates too soon risks a rebound in inflation. She said that eventually, the bank would cut rates, yet inflationary risks are tilted to the upside. Earlier, Richmond Fed President Thomas Barkin described the NFP report as robust but noted that inflation reduction has been inconsistent.

Dallas Fed President Lorie Logan said there’s “no urgency” to cut borrowing costs, adding the risk of cutting too soon is higher than being late.

Geopolitical risks loom following Israel’s attack on Iran’s embassy in Syria. Iran pledged to retaliate against Israel after seven officers were killed. A further escalation could pressure Gold prices upward, with traders looking at the $2,350 figure. World Gold Consortium reveals that the People’s Bank of China was the largest buyer of the yellow metal, increasing its reserves by 12 tonnes to 2,257 tonnes

Technical Outlook – Gold Price

Technical Outlook - Gold Price

The gold price continued to rise for the third week in a row. Gold Price rose to a new record high of 70699 from last week’s 67,677, up 4.37%. That was a highest weekly gain after 9 October 2023.

On the chart above, the formation of a long bullish candlestick indicates strong buying activity at the moment. However, prices must rise above 70,710 to test the next high of 71,300-71,650-72,000.

Alternatively, prices may retreat to the 70,100-69,800-69,500 range.

The general trend remains volatile amid geopolitical instability in the middle and jitters of future interest rate Fed rate cut.

Happy Trading!

Commodity Samachar
Learn and Trade with Ease

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