- Gold prices traded in the positive territory in the Asian session on Friday.
- Uncertainty over the US election and regional risks are supporting gold prices, but a recovery could cap gold’s gains.
- On Friday, US nonfarm payrolls data for October will be important.
Gold prices (XAU/USD) regained some of their losses on Friday, as uncertainty over the U.S. presidential election and regional conflicts in the Middle East provided some support to traditional commodities.
Still, rising U.S. Treasury yields and a strong dollar could keep temperatures warm. Investors will be looking closely at Friday’s U.S. jobs report for October for new strengths, including nonfarm payrolls, the unemployment rate and the money coming in within the hour. A strong result could prompt bets that the Federal Reserve’s loose policy will be more aggressive, leading to some weakness in metals.
Daily Summary Jobs Moves: Gold rebounds ahead of expected US nonfarm payrolls data
- “Gold should retain its upward bias and may even flirt with $2,800 in the days ahead, as long as US election risks continue weighing on market sentiment, while Fed rate cut expectations remain intact,” said Han Tan, chief market analyst at Exinity Group.
- The US Personal Consumption Expenditures (PCE) Price Index, rose 2.1% on a yearly basis in September, compared to 2.2% in August. This figure came in line with market expectations. On a monthly basis, the PCE increased 0.2%, as expected.
- The core PCE Price Index, which excludes volatile food and energy prices, jumped 2.7% in the same period, matching August’s rise and above the market estimation of 2.6%. The core PCE Price Index rose 0.3% on a monthly basis, in line with the consensus.
- US Initial Jobless Claims for the week ending October 26 fell from 228K to 216K, coming in below the forecast of 230K.
- Markets are currently pricing in almost 100% odds for a 25-basis points (bps) rate cut by the Fed in the November meeting.
Analysis: Gold prices remain strong in the long term
The price of gold was very high that day. The precious metal continued its strong rally on the daily schedule as the price found major support above the key 100-day exponential moving average (EMA). Also, the 14-day Relative Strength Index (RSI) is trading above the 50-day moving average at around 62.30, indicating that further upside is likely in the near term.
All-time highs in the $2,790-2,800 region and psychological issues seem like a tough nut to crack for the red-hot bulls. A decision to move higher could lead to a rally to $2,850.
On the downside, gold’s initial support is at $2,715, the low from October 24. The low from September 30 is at $2,500.
