- Gold prices remained relatively stable amid expectations that the Federal Reserve might halt interest rate hikes.
- Investors are awaiting US non-farm payroll data for guidance on rate hikes.
- There was a moderate increase in US weekly jobless claims.
On Thursday, gold prices remained relatively stable as the US dollar and Treasury yields declined amid expectations that the Federal Reserve might halt interest rate hikes. The dollar index slipped, and US 10-year note yields hit a three-week low, bolstering gold’s appeal.
Bob Haberkorn from RJO Futures noted that gold was strengthening due to indications of weakness in the US labor market, suggesting the Fed’s retreat from rate hikes.
Data revealed a moderate increase in US weekly jobless claims. While the labor market was gradually cooling, it showed signs of resilience.
In the week ending October 28, there was a 5,000 increase in initial claims for state unemployment benefits, reaching a seasonally adjusted total of 217,000. It exceeded the predictions of economists surveyed by Reuters, who had expected 210,000 claims for that week.
US productivity (Bureau of Labor Statistics)
Inflation news was positive, with worker productivity increasing the fastest in three years. This increase could aid the Fed in achieving its 2% inflation target.
The Fed maintained its interest rates unchanged as it assessed whether financial conditions were tight enough to control inflation. The market now predicts an 85% probability of another Fed pause in December, according to the CME Group’s FedWatch Tool. Investors also anticipated the US non-farm payrolls report for insights into the central bank’s policy direction and interest rates. Higher interest rates increased the opportunity cost of holding gold.
City Index senior analyst Matt Simpson highlighted that the jobs report would need to reveal surprisingly weak figures to exert downward pressure on Treasury yields and drive gold prices beyond the $2,000-per-ounce threshold.
Investors held back on significant investments ahead of the US employment report. Hareesh V., in charge of commodity research at Geojit Financial Services, explained that investors were uncertain about the Fed’s upcoming decisions. They were waiting for more critical data before making substantial gold investments, given ongoing uncertainties, particularly related to geopolitical tensions.
In October, gold surged over 7% and crossed the critical $2,000-per-ounce threshold due to safe-haven demand amid growing unrest in the Middle East.
“Gold benefits from geopolitical risks. If the conflict escalates, gold prices could further benefit,” added Haberkorn.