On Thursday (March 9), international gold prices fluctuated within a narrow range, and investors remained on the sidelines ahead of the release of U.S. employment data, which may affect the Fed’s monetary policy path. A drop in gold below the $1,800 mark would trigger a new potential downtrend.
At 14:47 Beijing time, spot gold fell 0.02% to $1,813.48 an ounce; the main COMEX gold futures contract fell 0.08% to $1,817.1 an ounce; the U.S. dollar index fell 0.13% to 105.553.
“( ) markets have been subdued … the market is still trying to digest the Fed’s policy outlook after Powell mentioned that eventually interest rates could rise higher than initially expected,” said Brian Lan, managing director at Singapore-based trader GoldSilver Central.
Markets are now pricing in a 50 basis point rate hike from the Fed at its March 21-22 policy meeting. Federal Reserve Chairman Powell reiterated on Wednesday (March 8) that interest rates may rise faster and higher. But he stressed that the debate is still ongoing and the final decision will depend on key data released before this month’s policy meeting.
Powell again acknowledged that the Fed’s initial view that inflation was a “transitory” factor that would ease on its own turned out to be wrong. He also expressed surprise at how well the labor market has recovered from the coronavirus pandemic.
Data released overnight showed that U.S. private payrolls increased by 242,000 in February, while U.S. job vacancies fell less than expected in January. Economists expect the U.S. non-farm payrolls report for February, due on Friday, to show an increase of 205,000 jobs for the month.
“Gold traders are awaiting Friday’s U.S. non-farm payrolls report for February before we witness any potentially significant positioning adjustments,” Edward Moya, senior market analyst at OANDA, said in a note.
While the central bank’s physical buying demand is very important and has provided support for gold, the Fed’s more aggressive interest rate hikes and keeping interest rates at high levels for a longer period of time may put more selling pressure on gold prices. If gold prices fall below the $1,800 an ounce mark, it could trigger a new potential decline.
On the daily line, the price of gold started a downward c-wave trend from $1,858, and the lower support looked at the 38.2% target of $1,799 and the 61.8% target of $1,762. The price of gold continues the downward (ii) wave that started at $1960, and the c wave is the sub-wave of (ii) wave.