(MENAFN- Daily Forex)
At the beginning of this week, the price of Gold retreated to below $2,642 per ounce, continuing its decline from record highs in the wake of indicators of a strong US labor market, which reduced the likelihood of the federal Reserve continuing to aggressively cut US interest rates. Last week, non-farm payrolls rose by about 254,000 jobs in September, exceeding expectations of 14,000 jobs, while the unemployment rate unexpectedly fell to 4.1%.
Overall, this economic data eased concerns about a weak Labor
market after weaker reports in previous months, limiting the size of the expected cuts in the current cycle. Obviously, Low interest rates reduce the opportunity cost of holding non-interest-bearing bullion assets. Now, financial markets are awaiting the latest minutes of the Federal Reserve meeting on Wednesday and the US consumer price index report on Thursday for further guidance.
Meanwhile, the bullish bias of the gold price index supports its safe-haven status, which is being reinforced by the escalating violence in the Middle East.
As for the factors affecting the gold market, the dollar holds its gains on a strong jobs report. The US dollar index DXY settled at 102.5 on Monday, after rising half a percent in the previous session following a stronger-than-expected US jobs report that prompted markets to discount any chances of another 50-basis point rate cut by the Federal Reserve in November.
According to the economic calendar results, data released on Friday showed that non-farm payrolls rose by 254,000 jobs in September, exceeding expectations of 140,000 jobs. Meanwhile, the country's unemployment rate fell to 4.1% from 4.2%. currently, financial markets see a 95% chance of a more modest 25-basis point interest rate cut in November and about a 5% chance of no change in the interest rate, according to the CME's FedWatch tool.
Now, Investors are looking ahead to the latest Federal Reserve minutes on Wednesday and the CPI report on Thursday to further guide price expectations. The US dollar has also benefited from increased safe haven flows amid escalating tensions in the Middle East.
Another factor influencing the gold market, the US 10-year Treasury yield is hovering at a two-month high. The US 10-year Treasury yield settled just below 4% on Monday after rising last week, hovering at a two-month high as a strong US jobs report dampened expectations of a rate cut by the Federal Reserve.
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According to gold analysts' forecasts, the overall trend for gold prices remains upward despite recent selling. As mentioned earlier, global geopolitical tensions and the abandonment of tightening by global central banks will remain supportive factors for gold prices. Therefore, any decline in gold prices will be buying opportunities. Technically, a downward shift in the trend will not occur without easing geopolitical tensions in the Middle East and a renewed tightening tone from global central banks. Furthermore, the first break of the trend requires a move towards the support level of $2,590 per ounce. Conversely, on the same daily timeframe chart, the closest resistance levels for gold are $2,665 and $2,680 per ounce, respectively.
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