On Wednesday, September 4th, spot gold rebounded slightly by 0.1% to $2,494.24 per ounce from the two-week low of $2,471.80 early in the day. The decline in gold prices was reversed on Wednesday, mainly due to weak job vacancy data in the United States, which increased the possibility of the Federal Reserve cutting interest rates significantly at its policy meeting this month.
On Wednesday, the US Bureau of Labor Statistics reported that job vacancies on the last day of July decreased by 0.237 million from the end of June to 7.673 million, the lowest level since January 2021. The job vacancy number at the end of June was revised down to 7.91 million from the previous 8.184 million. July job vacancies in the US fell to the lowest level in three and a half years, and combined with weak US manufacturing data released on Tuesday, intensified concerns about a hard landing for the world's largest economy. Traders have increased their bets that the Federal Reserve will cut interest rates by 50 basis points at the next meeting. Atlanta Fed President Bostic also said on Wednesday, "The Fed cannot maintain interest rates at too high a level, otherwise it could cause significant damage to employment." As a result, interest rate futures traders have increased their bets on a 50 basis point rate cut by the Fed at the September 17-18 meeting, raising the probability from 41% before the data release to about 49%. Investors and Fed officials are closely watching the labor market. The unemployment rate has risen for four consecutive months, exacerbating concerns about an economic recession. Therefore, the number of private sector jobs on Thursday and non-farm payroll employment on Friday will attract more market attention. If the data shows a continued significant weakness in the labor market, concerns about a US economic recession will inevitably increase, thereby increasing expectations of a larger interest rate cut in September. In that case, it is reasonable to expect an upward trend in gold prices. However, it is important to note that if the employment data unexpectedly strengthens, there is a risk that gold prices will be pressured downward by profit-taking at high levels.
Source: E-huitong
From a technical perspective, looking at the daily chart, gold prices are still being suppressed by the 5-day moving average, and the MACD bearish crossover signal is still present. There is still a need to beware of further downside risks in gold prices and continue to focus on the middle support of the Bollinger Bands, currently around 2475.26, with key support near the low of August 2nd at around 2470.69. If the aforementioned support levels are broken, it may open up a short-term downward channel. On the upside, watch out for resistance at the 2500 level and the 10-day moving average of 2506.64. If the 10-day moving average is unexpectedly broken, it would increase the bullish signal.
Wang Gang, Bank of China Guangdong Branch
For personal views only, not representative of the views of the organization.