During the Asian market on Friday, spot gold fluctuated narrowly and is now trading near the 2360 level. Gold rose more than 1% on Thursday, or more than $30, to a two-week high of $2365.35/ounce, closing at $2359.87/ounce. The latest US economic data showed signs of slowing, boosting bets on Fed rate cuts this year.
Bart Melek, head of commodity strategy at TD Securities, said: 'The market is beginning to expect the Fed to launch a loose plan. I guess there may be some long positions entering the market.'
The US Labor Department said on Thursday that the number of Americans who filed for unemployment benefits last week fell, but the latest data showed that the number of continued claims for unemployment benefits was the highest since January, a sign that the US job market continued to cool. In addition, another data released by the US Department of Commerce showed that the housing market is still struggling under the heavy pressure of the Fed's high interest rates. In May, housing starts and building permits both fell to their lowest level in about four years.
In addition, another data released by the US Department of Commerce showed that the housing market is still struggling under the heavy pressure of the Fed's high interest rates. In May, housing starts and building permits both fell to their lowest level in about four years.
According to the US Labor Department, the number of Americans who applied for initial unemployment benefits fell by 5,000 to 238,000 after seasonal adjustment during the week ending on June 15th. This reversed about one-third of the previous week's surge, which had pushed the number of initial claims to the highest level in 10 months. Economists had expected the number of initial claims for unemployment benefits last week to be 235,000.
Since the Fed raised interest rates by 525 basis points in 2022 to curb inflation, the labor market momentum has weakened in sync with the overall economy. The relaxation of the labor market situation has weakened inflationary pressures. Although the Fed policymakers are more hawkish in their outlook, the financial markets expect one or more interest rate cuts this year.
The period when the government conducted a survey of employers for the non-farm employment part of the June employment report was also included in the initial claims data. Although employment growth accelerated in May, this may have exaggerated the health of the labor market. The unemployment rate rose to 4.0% in May for the first time since January 2022, indicating that unemployed workers may find it more difficult to find new jobs.
The continued claims data next week may provide more clues to the labor market conditions in June.The seasonally adjusted number of continued claims for unemployment benefits rose to 1.828 million people in the week ending June 8th, the highest since January.
'The initial claims data indicates that job growth will not be repeated in June,' wrote Ryan Sweet, chief US economist at Oxford Economics Research Institute, following the latest unemployment data release. 'The risks of the labor market should be of concern to the Fed.'
Data from the US Department of Commerce showed that due to the restrictive policies of the Fed, the cost of home loan borrowing remains high, and the housing market is still under pressure. Driven by a sharp drop in multi-family residential projects, overall housing starts fell 5.5% last month to 1.277 million households, the lowest since June 2020. The proportion of single-family housing starts, the mainstay of residential construction, also declined, with the seasonally adjusted annual rate at 982,000 households last month, down 5.2% to the lowest level since October. Economist polled by Reuters expect last month's housing starts to rebound to 1.37 million.
Revised data for April showed that the annual rate of single-family housing starts rose from the previously reported 1.031 million households to 1.036 million households.
After the 30-year fixed-rate mortgage average interest rate exceeded 7% again in April and May, it continued to fall. According to the latest data from Mortgage Finance Agency Mortgage Weekly on Thursday, the average interest rate for the past week fell to 6.87%, the lowest level since April, because the labor market conditions loosened, making the Fed's two rate cuts this year possible again.
Building permits for May fell 3.8%, the lowest since June 2020, the same as the start rate. Applications for permits for single-family houses fell 2.9% to 949,000 households, the lowest in almost a year.
Last week's data showed a slowdown in the labor market and inflation pressure. The soft retail sales data released on Tuesday suggests that economic activity in the second quarter is still lacking.
Jim Wyackoff, senior market analyst at Kitco Metals, said in a report: 'Following weak US retail sales released earlier this week, long positions in precious metals gained confidence later this week.'
The FedWatch tool of the CME shows that traders currently believe that the probability of a Fed rate cut in September is about 64%.
Independent trader and analyst Vladimir Zernov predicts that despite the US dollar strengthening and US Treasury yields rising, the gold market will still rise. Escalating geopolitical tensions have boosted demand for precious metals; if gold prices remain above $2350/ounce, they will fall to resistance at $2390-2400/ounce.
Technically, on the daily chart, gold has now topped the key level of the 50-day moving average of 2343.82. The MACD has formed a golden cross, and the KDJ golden cross is running. Before it lost the 50-day moving average, the short-term trend is biased towards Bulls, with the upper resistance focused on the high point of June 7th2387.59 and the resistance near 2400 level.
Pay attention to the performance of the June PMI data in European and American countries on this trading day, and pay attention to news related to the May existing home sales annualized total and geopolitical situation in the United States.
(Spot gold daily chart, source: E-Huitong)
At 07:54 Beijing time, spot gold was quoted at US$2360.18/ounce.