Gold’s Momentum Amid Fed’s Rate Decisions and Bond Market Dynamics
Gold’s pricing breaks from its downtrend initiated on September 25, hovering around $1,830 per troy ounce in Thursday’s early Asian trading. Despite this upward trajectory, GOLD faces potential headwinds as market participants assess the US Federal Reserve’s prospective interest rate moves.
The prevailing market perspective anticipates subdued year-end values for spot gold, stemming largely from consistent signals of sustained elevated rates from the US Federal Reserve.
Influencing this climate, the US Dollar Index (DXY) recedes from its recent 11-month zenith, driven in part by Wednesday’s lackluster US employment metrics, which could result in diminished US Treasury yields. Currently, the DXY lingers around 106.60.
It’s pertinent to highlight that an initial surge in bond sales had previously catapulted US yields to multi-year peaks, succeeded by a significant recovery. Notably, the 10-year US Treasury yield has moderated from its Wednesday height of 4.88% – a peak last observed in 2007. The bond market remains under the keen eye of investors, given its instrumental role in shaping financial market trajectories.
Further, US ISM Services PMI witnessed a decline in September, settling at 53.6 from its previous 54.5, aligning with market anticipations. September’s ADP Employment Change registered an increase of 89,000, substantially missing the market’s predicted 153,000 and marking a low unseen since January 2021.With the imminent release of Jobless Claims and Friday’s Nonfarm Payrolls, gold market participants remain vigilant. Encouraging results may bolster the USD and heighten fluctuations within the bond market.
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