Spot gold was up 0.5% at $1,406.79 per ounce, as of 0721 GMT. U.S. gold futures climbed 0.6% to $1,408.90 an ounce.
· Also helping gold, the dollar eased from multi-week highs and global stock markets were in red, helping the metal reverse course following a more than 1% fall on Friday after strong U.S. jobs data lowered the likelihood of an aggressive rate cut by the U.S. Federal Reserve.
· “Despite the strong (U.S. jobs) numbers, the market is expecting a rate cut, just not as aggressive it would have been. We are still in a rate easing cycle right now,” said Howie Lee, an economist at OCBC Bank.
“Additionally, $1,400 is a pretty strong support level for gold. Also, growth still remains weak globally and we have geo-political tension between the U.S. and Iran. Overall factors are still supportive for higher gold prices,” he added.
· U.S. non-farm payrolls rebounded in June to 224,000, the most in five months, data showed on Friday, beating economists’ consensus estimate of 160,000.
· Fed Chairman Jerome Powell is expected to provide further cues on the near-term outlook for monetary policy this week at his semi-annual testimony to the U.S. Congress on the economy.
However, persistent moderate wage gains and mounting evidence the economy was losing momentum could still encourage Fed to cut interest rates this month.
A rate cut by the Fed could also prompt China’s central bank to cut its benchmark policy rate for the first time in four years to support the slowing economy, analysts say.
· Also on investors’ radar is U.S.-Iran tensions, with Tehran saying on Sunday it will shortly boost its uranium enrichment above a cap set by a landmark 2015 nuclear deal, prompting a warning ‘to be careful’ from U.S. President Donald Trump.
· Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.18% to 796.97 tonnes on Friday from 798.44 tonnes on Wednesday.
· On the technical front, spot gold may retest a resistance at $1,439 per ounce and as long as the metal stays above the support at$1,387, it may resume its uptrend towards $1,497, according to Reuters technical analyst Wang Tao.
· Wall St, Main St. Look For Gold Prices To Recover From Sell-Off
Participants in the weekly Kitco News gold survey are shaking off Friday’s slump after strong U.S. jobs data, looking for the metal to bounce next week.
They cited continuing expectations for U.S. rate cuts at some point in time, despite the jobs report, as well as gold’s technical-chart momentum prior to Friday’s pullback.
“We expect the uptrend in gold [prior to Friday] to continue,” said Phil Flynn, senior market analyst with at Price Futures Group. “A shaky global economy with weak data along with trade war fears should keep gold in its upward trend. Looking ahead, we see more chances of global economic stimulus, thereby weakening currencies and making gold more attractive vehicle to preserve value.”
Flynn said he doubts the jobs data will change the collective minds of the Federal Reserve policymakers, thus still looks for a rate cut.
“Because of the strong jobs report, some people believe the Fed may be less likely to cut,” Flynn said, commenting that this view is behind Friday’s decline in gold prices. “I don’t think the jobs report changes their concerns about a [potential] slowing economy and the trade war.”
Jim Wyckoff, senior technical analyst with Kitco, looks for gold to be steady to higher next week. “Charts still favor bulls,” he said.
Gold prices are pressuring trend line support guiding them higher since late May. A break below it opens the door to challenge a series of back to back resistance-turned-support levels running through 1346.75. Resistance remains at 1433.85, marked by the August 2013 top and the underside of support stretching back to December 2016. A breach above that targets north of the $1500figure.
· Among other precious metals, silver gained 0.6% to $15.06 per ounce, while palladium dipped 0.3% to $1,562.41.
Platinum rose 0.7% to $809.26, edging away from a more than one-week low touched in the previous session.
Reference: Reuters, Kitco, FXStreet, Daily FX
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