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 hawkish Fed outlook will reinforce bearish sentiment in the gold market.
At 15:19 Beijing time, spot gold fell 0.04% to $1,813.10 an ounce; the main COMEX gold futures contract fell 0.11% to $1,816.6 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.
Although the price of gold hit a more than one-week low of $1,809.32 an ounce on Wednesday (March 8), as Federal Reserve Chairman Powell reiterated the hawkish signal released the previous day in the House Financial Services Committee that day that interest rates may rise faster and more High, gold prices failed to stage any significant moves.
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.
But Powell also stressed that policymakers are still debating, and the final decision depends on important data released before this month’s policy meeting. Markets are now pricing in a 50 basis point rate hike from the Fed at its March 21-22 policy meeting.
Strong U.S. economic data put selling pressure on gold prices. 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 that the upcoming February non-farm payrolls report, which will be released on Friday, is expected to further confirm the hot U.S. job market, and gold will face new shocks.
“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.
With the Fed adopting a data-dependent approach to rate hikes, traders are scrutinizing every economic data release for clues on the market’s next big move. The gold market remains rife with opportunities to use short-term macro factors to drive price action.