Gold Strengthens, NFP Determines Direction!
Gold prices moved with a positive bias around US$4,070 oz on Thursday (July 2nd) and continued their gains for two consecutive days. This increase occurred because the US dollar weakened slightly after several US economic data came out weaker than expected.
Gold was boosted by the ADP US private employment data, which only rose by 98,000 in June. This figure was lower than the previous month's figure of 122,000 and also below market expectations of 113,000. This data signals that the US labor market is starting to show signs of slowing.
Furthermore, US manufacturing data also weakened. The ISM Manufacturing PMI fell from 54 to 53.3 in June. The Prices Paid Index also fell sharply from 82.1 to 73, indicating that cost pressures are easing. The decline in crude oil prices also helped quell short-term inflation concerns, causing the US dollar to lose some steam.
However, gold's gains are still being held back by expectations that the Federal Reserve remains likely to raise interest rates. According to the CME FedWatch Tool, the market still rates a 64% chance of a rate hike in September and nearly 85% before the end of the year. These expectations have prevented investors from fully pushing gold higher.
Comments by Fed Chairman Kevin Warsh also reinforced the US central bank's hawkish stance. He reiterated the Fed's commitment to bringing inflation back to its 2% target, despite political pressure for interest rate cuts. This stance maintains support for the US dollar and limits the upside for non-yielding gold.
The market's primary focus is now on the release of US Nonfarm Payrolls data in the North American session. If the NFP data is weak, gold has the potential to continue rising as expectations of an interest rate hike could subside. However, if the labor data is strong, the US dollar could strengthen again and put pressure on gold. Therefore, tonight's NFP will determine the short-term direction of gold prices. (asd)*
Source: Newsmaker.id
