Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data, and headlines that had the most impact on gold prices and other key correlated assetsâand may continue to in the future.
Gold prices are in the red for the week, but this shading elides what has been solid support for the yellow metal throughout the week and a not-insignificant rally following Monday’s sell-off.
Gold prices have been resilient this week, as lightly attended and interrupted by the Thanksgiving holiday in the US as it was. Traders and investors would initially have braced for an ugly end to November when spot prices toppled quickly on Monday morning in the US from last week’s strong close (and this week’s high-water mark, barring Friday fireworks) at $2720/oz. At the close of the first US session of the week, the yellow metal had fallen to the week’s nadir at $2610. The fall appeared to be driven by the same headwinds that have pummeled gold since Election Day: a strong climb in US Treasury yields and a resurgent US Dollar.
However, the market found some evident support above $2600, and on Tuesday, gold had already begun to regain some ground. One certain driver of this was the Tuesday afternoon release of discussion notes and minutes taken from the most recent FOMC meeting, which painted a picture of the US central bank committed and comfortable with continuing to cut interest rates on a path to “neutral” in spite of recently stubborn inflation data, albeit at a gradual pace. Gold trading could have pivoted on either of the headline points here. The yellow metal would likely have sunk lower again if investors focused on the Fed’s expectation for cuts to come “gradually” over the coming months, meaning that it will take longer for gold to potentially thrive in a truly lower rate environment. Instead, the implication that the FOMC is not giving serious consideration to pausing cuts entirely appeared the most dominant input, pushing (or at least permitting) gold spot to rise back to within touching distance of $2650/oz.
It should be noted, though, that this move in gold could also have been influenced by investors’ and traders’ expectations that the incoming US administration will apply meaningful pressure on the Fed to accelerate the path of monetary policy regardless of their stated plans today. If this is indeed a driving factor, we have to acknowledge the potential for increased volatility as gold and other assets would then continue to have a high level of sensitivity to any headlines or promises related to this developing story between now and Inauguration Day (and probably beyond.)
With all the attention from the gold marketâ from most asset classes, to be fairâ on how 2024’s US elections will impact the economy of 2025 and beyond, the absence of most US-based traders from the commodities markets on Thursday (for Thanksgiving) proved a boon to the yellow metal’s spot price. And the increased but still minimal presence of New York and Chicago desks on Friday has done little to reel that back, with gold currently running a flat-ish line at $2660/oz.
Next week gets more active on the economic calendar as we kick off the final trading month of 2024, and participants try to squeeze everything into the two-and-a-half weeks between now and the holiday season slump. We’ll have the latest ISM reporting to contend with, a direct address from Fed Chairman Jerome Powell, and the November Jobs report due on Friday.
In the meantime, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see you back here next week for another market recap.
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