Gold Market comment on behalf of Chris Weston

29 Temmuz 2024

Today’s market analysis on behalf of Chris Weston Head of Research at Pepperstone

While we look ahead at a huge week of event risk facing financial markets, tactically, it feels as though we’re waiting for answers around the macro jigsaw, which increases the risk that gold chops around in a $2440 to $2350 range in the near-term. That may seem like a wide range, but it’s unfitting with the weekly ranges we’ve seen over the past four weeks.

We can also see that while we saw a false start to the rally in mid-July, the gold price has since pulled back below $2400, and it appears as though we’re poised to resume the sideways consolidation that started in mid-April. The fundamentals largely back up a regime of upbeat intraday movement, amid a long-term consolidation on the higher timeframes.

Fed expectations matter for gold, and US interest rate swaps now look well priced, with a 25bp cut in the September FOMC meeting fully expected, and where a weak US nonfarm payrolls report on Friday may even result in a small premium for a 50bp cut being priced – where a 50bp cut would only be pulled out as an emergency measure, and on current news flow seems very unlikely. We also see nearly 8 25bp cuts priced and implied over the coming 2 years, and that could almost be seen as the line in the sand (in pricing), between a soft landing and recession. Clearly, if we see evidence in the upcoming US data flow that really increases the recessionary odds, then we could see 10 cuts implied over the coming 2 years, and that dynamic would really get gold pumping back towards $2500.

Conversely, if the US labour market gives us any reason to think this implied pace of cuts is too rich, and rates traders have gone too hard, then US 2yr Treasury yields should fly and gold could be trading through the 50-day moving average (currently $2359), and into $2300 early next week – a level where buyers have only been too willing to act throughout all of June.

We can also see the prediction sites that Kamala Harris has hit the ground running, and we’re seeing the DEMs seemingly right back in the race – if you were buying gold against a Trump win, resulting in protectionist measures, a fallout in US relations, and also a blow out in the deficit, then you’re probably reviewing that exposure.

 

Zaid Barem / YMM