Gold Price Lingers Near $1,940 Amid Mixed Global Cues

Arslan Butt•Tuesday, September 5, 2023•2 min read

GOLD , for the second consecutive day on Tuesday, reflects a subdued trading pattern, although it remains within the trading boundaries seen in the preceding week. Positioned just shy of the $1,940 threshold, XAU/USD experiences a minor dip of under 0.10% for the day, influenced by an array of determinants.

While there are indications of a relaxation in the US labor market conditions, the Federal Reserve (Fed) is anticipated to maintain elevated interest rates for an extended period. The market’s current disposition also includes a potential 25 basis points elevation by the year’s close. Consequently, this sustains the high US Treasury bond yields, which, in turn, bolsters the US Dollar (USD) at the expense of the non-interest-bearing GOLD .

Furthermore, an optimistic market sentiment, strengthened by China’s potential announcement of additional economic stimulants to boost its decelerating recovery, impacts the appeal of the safe-haven XAU/USD. Of note, China augmented its local dollar liquidity and modified some mortgage guidelines recently, aiming to bolster its struggling real estate domain. Moreover, an agreement by China’s Country Garden Holdings with creditors to delay certain payments due over the weekend is also noteworthy.

In a related development, the National Development and Reform Commission (NDRC), China’s primary economic architect, divulged plans to institute a dedicated unit to rejuvenate its waning private economic sector, thereby amplifying investor optimism and fostering bullish equity market sentiment.

Nonetheless, gold’s downside appears buffered by the anticipation that the Fed’s rate-increase trajectory is nearing its zenith.

The prevalent consensus indicates the US central bank’s propensity to maintain the status quo concerning interest rates in their imminent September policy congregation, a sentiment augmented by the recent equivocal US employment figures. While the National Non-Farm Payroll (NFP) figures surpassed expectations, they were counterbalanced by a downward adjustment of the prior month’s statistics and a surprise uptick in joblessness rates. Furthermore, the annual rate of Average Hourly Earnings witnessed a contraction, reflecting minor stagnation in employment dynamics.

Such factors curtail the Fed’s latitude in persistently hiking rates, subsequently stymieing aggressive USD proponents from initiating fresh positions and inadvertently favoring the USD-priced gold. Therefore, it remains judicious for traders to await a definitive downward trend before concluding the gold’s recuperation from its March 13 low near $1,885 and adopting a pronounced bearish stance on the XAU/USD.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.