On Wednesday (November 30), the international gold price rose slightly, helped by the decline in the dollar. Investors are mainly focused on the upcoming speech of Federal Reserve Chairman Powell to understand the Fed’s future monetary policy path. ADP employment data, which will be released before Powell’s speech, is also in focus.
At 15:15 Beijing time, spot gold rose 0.35% to $1,755.71 an ounce; the main COMEX gold futures contract rose 0.29% to $1,768.9 an ounce; the U.S. dollar index fell 0.21% to 106.581.
Federal Reserve Chairman Jerome Powell will speak on the U.S. economic outlook and job market at 2:30 Beijing time on Thursday (December 1), and investors will look for any new clues about the Fed’s plan to raise interest rates next year.
The greenback’s latest slide could also be linked to weaker U.S. data. The Conference Board Consumer Confidence Index released overnight in the United States in November fell to 100.2, the expected value was 100, and the previous value was revised down from 102.5 to 102.2.
ADP employment data, which will be released before Powell’s speech, is also in focus. According to preliminary estimates, the U.S. ADP employment population will increase by 200,000 in November, lower than the previous value of 239,000. The job market will face the impact of rising interest rates, which have forced companies to pause hiring amid growing expectations of an economic slowdown.
ED&F Man Capital Markets analyst Edward Meir said Powell’s speech was the main focus of the market. “If Powell takes a hawkish stance, the dollar will strengthen and gold could go back to $1,745. But if he sounds more dovish, gold could go to $1,780.”
The high interest rate environment has been hampering non-yielding gold’s traditional status as a hedge against soaring inflation and other uncertainties this year as the opportunity cost of holding bullion has become higher.
Economists at TD Securities predict: “Despite the recent rise in gold prices, the continued sharp rise in short-term U.S. real and nominal interest rates is expected to push gold prices down to $1,575 an ounce in the first quarter of 2023. After the first quarter, gold prices are likely to Starting to move up towards over $1,800 as the Fed’s tightening cycle is drawing to a close and the market is starting to price in an imminent rate cut.”