Gold Suddenly Wild in Asian Session, What's the Signal?
Gold prices fluctuated wildly in Wednesday's Asian session, with XAU/USD now hovering around US$4,061 per troy ounce after previously strengthening. This rapid ups and downswing occurred as the market was still digesting the Fed's meeting minutes and preparing for tonight's release of US employment data (NFP).
One of the main drivers of volatility was profit-taking. After gold rebounded several times from the psychological US$4,000 level and briefly climbed above US$4,070, many short-term market players opted to lock in profits before the big data was released. As a result, every slight increase was quickly sold, resulting in a long and choppy Asian candlestick pattern.
From a fundamental perspective, the Fed minutes showed a divided committee regarding a December interest rate cut. Some officials still left the door open for a cut, but many preferred to be more cautious as inflation remained subdued. These declining expectations of a rate cut supported the US dollar and held back gold, so any price increases tended to be used to reduce positions.
At the same time, global sentiment is also mixed. Concerns about technology stock valuations and the fiscal conditions of several countries have driven inflows into safe-haven assets like gold. However, when stocks react positively to certain news, these flows can partially reverse to equities. Because liquidity in the Asian session is thinner than in Europe and the US, this kind of position shifting makes gold's movements appear more volatile than usual.
Going forward, gold's direction depends heavily on the NFP results and other labor data. If the data comes out weaker than expected, the likelihood of another interest rate cut could increase, and gold could potentially retest the upper area around US$4,100. Conversely, if the data is strong and supports the Fed's more cautious stance, gold risks being pushed back to the US$4,040 to US$4,000 zone, which serves as important short-term support. (asd)
Source: Newsmaker.id
