Week Ahead: Oil Retreats, Gold Breaks $4,000 as US Midterms Take Centre Stage

(MENAFN- MENAFNEditorial)

Markets enter an important week as geopolitical developments intersect with the US elections and economic data, against a backdrop of mounting pressure on the technology sector’ Trump’s prefer“nce for “giving more ti”e to talks”, alongside efforts in Doha to secure the reopening of the Strait of Hormuz under a seven-day plan or shorter, has eased supply concerns and pushed Brent back towards $110 range. However, a sustained decline price action depends on diplomatic optimism translating into tangible progress.

Gold: Breaking $4,000 Puts Confidence to the Test
Gold stabilized near $3,900 an ounce in early-week trading after losing 3.7% on Friday and breaking below $4,000. This initial stability suggests selling pressure has eased to some extend, but it is insufficient to it an end to the correction. Easing geopolitical concerns may help reduce pressure on gold, although yields and the dollar remain important-to-watch factors. Reclaiming $4,000 could help rebuild confidence a bit, while trading below it leaves the metal sensitive to data that reinforce expectations of tighter monetary policy. And hence I maintain a bearish outlook on gold for the tenth consecutive week.
Labour Market: Improving Hiring Meets Faster Wage Growth
Attention turns to the employment report, with payrolls expected to rise by 63,000, compared with 29,000 previously, and unemployment projected to remain at 4.2%. Despite the anticipated improvement, hiring remains modest, giving revisions to previous months and the participation rate greater significance. Monthly wage growth is also expected to accelerate to 0.3% from 0.1%, a combination that could complicate the Fed’s calculations if wage pressures persist despite subdued hiring. Job openings and unemployment claims will complete the picture, with vacancies expected to increase to 7.11 million and initial claims projected to rise to 197,000. Together, these readings will help determine whether the labour market is stabilising or gradually losing momentum.
Midterm Elections: Politics Reshape Expectations
The US elections represent a significant test for expectations around spending, taxation and regulation, as the balance of power in Congress will determine the administrati’n’s ability to advance its agenda. Technology, energy and healthcare could respond differently depending on the results and potential legislative priorities. Markets will pay particular attention to shift in the likelihood of tighter oversight of artificial intelligence.
Consumer Confidence and the Yen Complete the Picture
US consumer confidence is expected to edge down to 47.8 from 48, while inflation expectations will reveal how persistent price concerns remain. Kazuo ’eda’s remarks will also attract attention as markets assess’Japan’s interest-rate path following the achievement of its inflation target, and the implications for the yen and yield differentials.

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