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Gold price reverses softer US jobs data-inspired gains amid reviving US Dollar demand

November 6, 2023| Forex Market

  • Gold price drifts lower during the Asian session and retreats further from Friday’s post-NFP swing high.
  • The USD bounces off a multi-week low amid rebounding US bond yields and weighs on the metal.
  • Bets that the Fed is done hiking rates and geopolitical tensions should limit losses for the XAU/USD.

Gold price (XAU/USD) kicks off the new week on a weaker note and extends Friday’s retracement slide from levels above the $2,000 psychological mark touched in reaction to softer jobs data from the United States (US). The US Dollar (USD) attracts some buying in the wake of a modest pickup in the US Treasury bond yields and turns out to be a key factor weighing on the precious metal. Apart from this, a generally positive tone around the equity markets drags the safe-haven commodity below the $1,985 level during the Asian session.

That said, growing acceptance that the Federal Reserve (Fed) is nearing the end of its policy tightening campaign should cap any further upside for the USD and continue to lend some support to the non-yielding Gold price. Apart from this, the risk of a further escalation in the Israel-Hamas conflict should help limit the downside for the XAU/USD. This, in turn, warrants some caution for aggressive bearish traders and before positioning for any meaningful corrective decline from the YTD peak, around the $2,009 region touched on October 27.

Daily Digest Market Movers: Gold price is weighed down by rebounding US bond yields and reviving USD demand

  • The US Dollar stages a modest recovery from a six-week low touched on Friday and draws support from a goodish pickup in the US Treasury bond yields, which, in turn, is seen weighing on the Gold price.
  • Firming expectations that the Federal Reserve will not hike rates again, bolstered by the softer US macro data released on Friday, should keep a lid on any meaningful appreciating move for the Greenback.
  • The headline NFP showed that the US economy added 150K jobs in October as compared to 180K estimated and the previous month’s reading was also revised down to 297K from 336K reported originally.
  • The US ISM Non-Manufacturing PMI fell to a five-month low level of 51.8 in October from 53.6 the previous month, reaffirming bets that the Fed will maintain the status quo again at the December policy meeting.
  • On the geopolitical front, Israel on Sunday rejected growing calls for a ceasefire in Gaza and said that Israeli forces are set to intensify their operations against the Palestinian Islamist group, Hamas.
  • Israel’s chief military spokesperson said the military had attacked terrorist targets of Hezbollah in southern Lebanon in response to a missile attack against tanks that killed an Israeli citizen.
  • Hezbollah said it responded by firing rockets at the town of Kiryat Shmona in northern Israel and said that it would never tolerate attacks on civilians and its response would be “firm and strong”.
  • Lebanon’s militant group chief Hassan Nasrallah said that his Iran-backed group was not afraid of US warships and all options were open for an expansion of the conflict into Lebanon.

Technical Analysis: Gold price might continue to attract some buyers at lower levels

From a technical perspective, any subsequent downfall is likely to find some support near the $1,980 level ahead of last week’s swing high, near the $1,970 region. Some follow-through selling will make the Gold price vulnerable to slide further towards the $1,964 area en route to the next relevant support to the $1,954-1,953 zone.

On the flip side, the $2,000 mark could act as an immediate barrier ahead of Friday’s swing high, around the $2,004 area and the YTD peak, around the $2,009 region. A sustained strength beyond the latter has the potential to lift the Gold price further towards the $2,022 resistance zone.

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.

USD   0.00% 0.03% -0.03% 0.08% 0.08% 0.12% -0.16%
EUR 0.00%   0.04% -0.03% 0.07% 0.07% 0.11% -0.17%
GBP -0.03% -0.03%   -0.07% 0.04% 0.04% 0.07% -0.20%
CAD 0.03% 0.04% 0.07%   0.10% 0.11% 0.14% -0.14%
AUD -0.06% -0.08% -0.03% -0.11%   0.00% 0.05% -0.24%
JPY -0.08% -0.07% -0.27% -0.09% 0.00%   0.03% -0.25%
NZD -0.12% -0.09% -0.08% -0.14% -0.04% -0.04%   -0.27%
CHF 0.17% 0.17% 0.20% 0.13% 0.24% 0.25% 0.28%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

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