Gold continues to decline

4 Mayıs 2024

Market analysis on behalf of Samer Hasn Market Analyst and part of the Research Team at XS.com

Gold's declines come after better-than-expected numbers for the US labor market, which would reinforce pessimistic assumptions about the path of monetary policy, in conjunction with the calm of the geopolitical front in the Middle East until now. We witnessed a lower-than-expected amount of weekly initial unemployment claims, at 208K, in addition to the fastest pace of growth in unit labor costs in two years, according to the preliminary reading of the Bureau of Labor Statistics for the first quarter, at a rate of 4.7%, which had also exceeded expectations.

The markets do not seem to be anticipating a rate cut closer than next September, at the earliest. Therefore, gold needs the return of negative surprises from the US economy and the continued trend of central banks to accumulate bullion or the trend of the ongoing conflict in the Middle East to worsen again in order to restore the yellow metal’s luster as a safe haven in times of war.

The Middle East front seems relatively calm at the regional level, but what the markets fear is the beginning of the ground military operation in Rafah, which already seems imminent and is being prepared for. While regional and international parties continue to warn of the dire consequences of this process, which may extend beyond the scope of the current conflict.

Zaid Barem, Your Mind Media