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Gold Bulls Hold On
Gold prices are holding onto gains as early European trading gets underway on Monday. The market rebounded through the back end of last week as softer US inflation and higher weekly jobless claims curtailed the rally in USD. Still, we’ve seen an important shift in the Dollar outlook with traders now scaling back their Fed easing expectations in line with a strong uptick in September jobs data. The market is now pricing in less than .5% of easing ahead of year end in line with less-dovish Fed commentary.
US Data
Price action is expected to be muted today given that US markets are offline for Columbus day, with Japanese traders off today also. Looking ahead this week, US retail sales on Thursday will be the only key data for the Dollar, along with weekly jobless claims. However, gold prices look set to receive a further boost from an anticipated ECB rate-cut on Thursday.
ECB Easing Expectations
In line with weakening economic data, the ECB is now expected to cut rates again on Thursday, having previously signalled a desire to hold rates steady for a period. Traders are now pricing in a further .25% cut which, if seen, should keep gold prices supported near-term. Focus will then be on the forward guidance issued. If the ECB downplays the likelihood of further easing, this will likely blunt the downside reaction in EUR. However, if the bank sticks to a dovish outlook alongside the rate cut, this should be firmly bullish for gold prices.
Technical Views
Gold
The rally in gold has stalled for now into YTD highs at 2,684.76. However, with the current correction holding support at 2,604.56 and remaining above the bull channel for now, the focus remains on a fresh push into new highs. Below current support, 2,350.56 will be the next support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.