Gold market comment

30 Ağustos 2024

Today’s market analysis on behalf of Dilin Wu Research Strategist at Pepperstone

Since gold surpassed the $2,500 mark, bullish momentum has notably diminished, with prices now hovering at elevated levels. I believe this is primarily because the market has already fully priced in the favourable conditions, leaving gold in need of new catalysts to reignite a trend.

Powell’s dovish remarks at the Jackson Hole symposium have certainly made waves, but expectations for Fed rate cuts have already repeatedly baked into gold prices, and he didn’t provide any clues regarding the specifics. Meanwhile, I think factors supporting gold in the medium to long term, such as U.S. election risks, Middle East conflicts, and central bank gold purchases, remain unchanged. In my view, while the fundamental outlook for gold is largely bullish, the potential for new highs is quite limited without new developments.

From my perspective, the release of the September Non-Farm Payrolls report is the best chance for gold to test $2,600 before the next FOMC meeting. Given that the US Bureau of Labor Statistics has already revised down employment growth for the year ending March 2024 by a whopping 818,000 – sparking some market jitters –  I believe if August’s new jobs added fall below 100,000 and the unemployment rate remains at 4.3%, the Fed might be pushed to cut rates by 50 basis points in September. At that point, as the market increasingly prices in a potential economic downturn, gold could see a boost from rising safe-haven demand and challenges the $2600 mark.