Gold Pushing Higher

Gold prices are pushing firmly higher into the end of the week with gold futures now once again testing the bull channel highs and 2364.93 resistance. The driver behind the move is the weakness we’re seeing in USD on the back of yesterday’s US jobless claims. The figure was seen jumping to 231k from 209k prior, above the 212k the market was looking for. At this level, jobless claims are the highest they’ve been in several months and on the back of last week’s weaker-than-forecast US labour market data, traders are pricing in the risk that US economic growth is weakening. Indeed, the advanced Q1 GDP figure released recently came in below forecasts, underscoring this concern.

Fed Easing in Focus

Traders are now once again turning their attention to near-term Fed rate cut risks. The outlook regarding potential Fed easing has been very fluid in recent months with better data and hawkish Fed commentary seen downplaying near-term rate cut chances, propping up USD. However, with labour data weakening and growth slowing, there is a growing sense that rate cuts are moving closer again. Market pricing has now shifted back in favour of a September cut from the previously pegged November date.

US Inflation

Looking ahead, next week’s US CPI will be crucial for gold. If we see any softening in inflation, pricing for a September rate cut is likely to jump, dragging USD lower and creating room for a breakout higher in gold. However, if inflation is seen remaining sticky at current levels, this will no doubt create near-term headwinds for gold.

Technical Views

Gold

The latest test of the 2275.43 support level has seen the market turn higher once again. Price is now pushing above the bull channel highs and above the 2364.93 level resistance. With momentum studies turning higher, focus is on a breakout to fresh highs while current support holds. 

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