Gold prices are climbing ahead of the release of the Federal Reserve’s interest rate decision, which could mark the end of a 4-year bull market for the precious metal. Yet, the fact that the US dollar is dropping against other currencies also means that gold’s value is rising.
Gold prices have gained even more value since the last installment, when our team of analysts assessed the strength of the yellow metal that has been steadily rising while almost all other markets have been sliding. The yellow metal seems to have regained its consistency and is trading in a sideways manner, awaiting the next catalyst to show up at the precious metals market.
Gold prices have been on a rollercoaster ride since the middle of last year, rising and falling in a range that has been bracketing a bottom of just above 200 USD per ounce. On Friday, gold prices moved sharply higher again, and are now trading around the 200 USD mark.
- Consecutive positive days for gold
- Key marking before employment data
- Other raw materials largely unchanged
The week was relatively positive in terms of commodity news for the gold market. The precious metal is approaching the end of the week and the start of trading on the back of its third consecutive positive day. This is healthy momentum for gold as this afternoon sees the release of NFP data in the US, which will be crucial for the rest of the trading day and sentiment in the week ahead. No surprises are expected to shake up the market, although most commodities, as well as gold, opened the European session timidly.
A strong week should end well
From last week to the beginning of this week, the gold market took some beating as it rebounded from a two-month low of $1750. After a very good weekend, this figure now looks like a distant memory as the market tries to recover. An important factor will be not only the NRP employment data, but also a careful examination of the COVID 19 situation.
Rising incidents, especially in the United States and other major economies, have reinforced gold’s traditional value as a safe haven. This has come at the expense of some of the more volatile and risky asset classes, as evidenced by the dynamics of US government bond yields. This has enabled the USD to strengthen further to a significant extent, which is seen as a positive factor for gold.
Key employment data at end of week
Today in the United States, the non-farm payrolls are announced. Analysts expect the number of new jobs to be about 690,000. This figure would be significantly higher than the previous month and would indicate an active recovery of activity in the economy. This data can affect gold in several ways.
If the numbers come in higher than expected, that should put pressure on the gold markets and eventually push them below the levels seen earlier this week. However, a disappointing figure will move the precious metal higher and dampen the expectations of many.
Other markets remain uncertain
While the gold price remains bullish for the future, other markets are rather stagnant this morning. Most basic products remain within reach. This also applies to the price of oil, which last week reached a two-year high of more than $76 a barrel.
The price remains high, around $75, but is fluctuating as OPEC has yet to agree on a production rate, while concerns over the COVID-19 option remain and prevent real progress. This has been seized upon by some as an opportunity to exit the market at these levels. The key issue will be the OPEC+ production agreement.Gold dipped below $1,300 an ounce this week as investors bet on an ongoing weakening of the dollar. The precious metal has fallen slightly in the past month, as the U.S. Federal Reserve continues to discuss raising interest rates. With the Fed expected to raise rates this month, gold is expected to rise. Rising interest rates could result in the dollar strengthening, which could make gold a less attractive investment, however.. Read more about nfp calendar 2021 and let us know what you think.
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