Gold prices rebounded in the mid-North American session on Thursday, recovering from a daily low of $2,638. The price increase can be attributed to heightened geopolitical concerns, particularly tensions between Israel and Iran. Simultaneously, a strong US Dollar and fading bets on aggressive Federal Reserve (Fed) policy easing have also supported higher US yields. As of the latest data, the XAU/USD is trading at $2,659.
Geopolitical Tensions Drive Market Sentiment
Wall Street is experiencing losses as geopolitical risks remain at the forefront of investor concerns. Israel’s military actions in Lebanon and Iran’s missile attack have fueled uncertainty in global markets. Moreover, US President Joe Biden’s comments on potential attacks on Iranian oil facilities further impacted market sentiment, driving up gold prices beyond $2,650.
US Economic Data Overview
On the economic front, the US labor market continues to show signs of softening. Recent data from the Department of Labor indicates that unemployment benefit claims exceeded expectations. Additionally, the Institute for Supply Management (ISM) reported that business activity in September was stronger than August, as indicated by an increase in the ISM Services PMI.
Meanwhile, Factory Orders for August showed a slight contraction, a signal that some segments of the economy are slowing. Traders are now focused on the upcoming US jobs report due on Friday, which could trigger significant market volatility.
Federal Reserve’s Position on Interest Rates
Comments from Federal Reserve officials added further complexity to the market. Raphael Bostic from the Atlanta Fed suggested that the natural employment rate may have shifted to a lower level, while Chicago Fed President Austan Goolsbee mentioned that inflation is aligning with the Fed’s target. He also emphasized that the focus should not be on small interest rate cuts but on achieving a neutral rate over the next year.
The Fed’s current stance has affected US Treasury yields, with the 10-year note rising to 3.84%. The US Dollar Index (DXY), which measures the dollar’s strength against other currencies, also saw gains, climbing to 101.95.
Daily Market Digest: Gold Price Stays Steady
In terms of daily market movers, gold prices have maintained gains thanks to economic data hinting at further easing by the Fed. Initial jobless claims for the last week of September increased from 219,000 to 225,000, slightly exceeding predictions. Additionally, the ISM Services PMI rose to 54.9 in September, reflecting expanding business activity.
Other key data points, such as Factory Orders, saw a -0.2% drop in August, contrasting with the previous month’s rise. Market participants now expect the Nonfarm Payrolls report, due on Friday, to show 140,000 new jobs for September, a slight decline from August. The unemployment rate is expected to stay unchanged.
XAU/USD Technical Analysis: Key Levels to Watch
The gold price remains in an upward trend but has encountered resistance around $2,650. The Relative Strength Index (RSI) indicates continued bullish momentum, even as it has flattened over the past two days.
If XAU/USD dips below $2,650, it may open the door for further declines, potentially testing the September 30 low of $2,624 and the September 18 peak at $2,600. A break below these levels could trigger a more significant correction, targeting the 50-day Simple Moving Average (SMA) at $2,519.
On the upside, clearing the all-time high of $2,685 could push gold prices toward $2,700, further extending the bullish trend.
n conclusion, the recent rise in gold prices is a direct result of escalating geopolitical tensions and evolving economic conditions in the US. Traders should continue to monitor key events, such as US jobs data and Federal Reserve commentary, which are likely to drive future price movements in the gold market.
For more insights on daily gold movements, visit Daily Gold Signal. To stay updated on daily gold price changes, check out the Daily Gold Update.
