Gold has seen a sharp decline in the last few days, breaking the support zone of $1,890 and sliding further down to break the next key support level at $1,850.
It is currently trading near a 6-month low.
After the resilience shown in the first 20 days of September, with the price trading within the tiny range between $1,890 and $1,950, the expectations for more hawkish central bank policies for longer have weighed on the price of gold.
So what is the outlook for gold now?
Bullion is likely to remain under pressure until the markets have more clarity on when central banks’ interest rates will reach a peak – this is expected very soon.
But at the same time markets are worried by the idea of having “high interest rates for longer”, as widely repeated by policymakers in the last few weeks.
Turning to the macroeconomic calendar, later today will be the release of the ISM Manufacturing PMI, while tomorrow it will be the turn of the Jolts (The Job Openings and Labor Turnover Survey). Tomorrow the Australian Central Bank is also scheduled to meet for a monetary policy decision: it is currently expected to maintain rates steady at 4.10%.
But the key figures will arrive later this week. Indeed, on Friday investors will keep their eyes on the US Nonfarm payrolls and the unemployment rates (both related to September), and the average hourly earnings. These figures are extremely important for the gold market as they are set to influence the next Federal Reserve policy decision.
A decline in the nonfarm payrolls could force the Fed to soften its hawkish stance, while data above the forecast (+163k) could leave doors open for one more rate hike.
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