Gold market comment on behalf of Michael Brown

Gold market comment on behalf of Michael Brown Senior Research Strategist at Pepperstone

Spot gold has been rather rangebound of late, spending much of the week consolidating north of the $2,500/oz handle, finding solid buying interest upon several re-tests of that figure. The relatively subdued conditions speaks to the quiet nature of this week’s data docket, which has been lacking in top-tier macro releases, and continues to do so until the August US employment report, due next Friday. Hence, the yellow metal has found itself in something of a tug-of-war between still-supportive central bank buying, and relatively firm risk appetite.

Aforementioned flows do tilt the balance of risks to the upside over the medium-term, having been a powerful tailwind to gold for much of this year. Naturally, goldbugs will be seeking a soft jobs report next week, which would likely see the market more aggressively price a 50bp September Fed cut, to provide further support to any potential rally. While a hawkish repricing of the market’s overly-ambitious current rate pricing may well pose headwinds to the precious metal complex, a closing break below $2,500/oz is likely needed before bears have conviction to re-enter the fray.

Zaid Barem / YMM