Gold to New Highs Amidst Disappointing US Data

Gold prices are at new highs on disappointing US data, approaching December highs. Uncertainty prevails amid upcoming NFP release.

In the wake of disappointing US economic data, the price of gold (XAU/USD) has surged, reaching levels not seen since December last year. The unexpected downturn in key indicators has reignited market expectations of US interest rate cuts, prompting investors to seek refuge in the precious metal.

Last Friday’s release of the US ISM manufacturing PMI and the Michigan Consumer Sentiment report fell significantly short of market forecasts, underscoring concerns about the health of the world’s largest economy. These disappointing figures have prompted a slight increase in expectations for US rate cuts in 2024, with two-year US Treasury yields experiencing a notable decline.

Gold to New Highs Amidst Disappointing US Data

Federal Reserve Chair Jerome Powell will deliver a two-day testimony, aligning with releasing crucial US ADP and Jolts data. However, The eagerly anticipated monthly US Jobs Report (NFP) is poised to offer further insight into the state of the labor market.

The decline in US bond yields has propelled gold prices, allowing the precious metal to surpass previous resistance levels and approach highs recorded in December. With $2,070/oz. Now serving as a potential support level, attention is focused on the $2,043/oz. Mark before a possible challenge of the December 4th spike high at $2,146.8/oz. However, caution advises as technical indicators, like the Commodity Channel Index (CCI), signal gold’s heavy overbought condition in the short term.

Retail trader data reflects a mixed sentiment, with 44.64% of traders net-long and 56% of clients net-short on gold. Daily and weekly changes in sentiment suggest a degree of uncertainty among traders, with fluctuations influencing gold’s price movements in the near term.

As market participants brace for upcoming economic data releases and events, the direction of gold prices remains uncertain. However, with lingering concerns about the global economic outlook and US monetary policy, the precious metal could continue to attract investor interest as a haven asset in the coming weeks.

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