Gold market comment by Dilin Wu

10 Eylül 2024

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

Gold has been stuck in a tight range between $2480 and $2530 over the past three weeks. In my view, the uncertainty surrounding the Fed’s next move in September is making it difficult for gold to break out of this holding pattern.

Traders were expecting last week’s non-farm payroll data to offer some clarity, but the mixed results left us with more questions than answers. With job gains falling short of expectations and unemployment dipping slightly, we’re left without a clear signal on whether the Fed will opt for a 25 or 50 basis point cut next month. While key Fed members like Williams, Waller, and Goolsbee have leaned dovish, none of them provided concrete guidance on the size of the rate cut. I believe this lack of direction is why gold is drifting without a clear trend.

In my opinion, the most significant potential catalyst in the near term is tomorrow’s U.S. CPI report. The market is anticipating core inflation to hold steady at 0.2% MoM and 3.2% YoY. If the data aligns with these expectations, I think we’ll likely see the Fed cut rates by 25 basis points in September, and since this scenario is already priced in, gold probably won’t react much.

However, if inflation cools more than expected—especially if core inflation drops below 3%—then the likelihood of a 50 basis point cut increases. But even then, I don’t expect panic; any gold rally would likely be short-lived, driven more by cooling inflation than a deterioration in the labor market.

To sum up, while CPI and the upcoming U.S. presidential debate may trigger some short-term volatility in gold, I believe we won’t see any decisive trend until the Fed officially announces its rate cut. For now, I’ll be keeping a close eye on how gold navigates the $2480 to $2530 range.

 

Zaid Barem / YMM