Gold price rally mode on latest geopolitical tensions, but Friday’s employment report could disrupt momentum – analysts

(Kitco News) Gold breached the coveted $ 1,800-an-ounce level on Thursday due to rising geopolitical tensions between the US and China. But Friday’s upcoming employment report could disrupt the momentum, analysts say.
December gold futures rose $ 33 on Thursday, hitting a daily high of $ 1,812. At the time of writing, prices were at $ 1,808.20 per ounce.
Taiwan is at the center of the latest round of geopolitical tensions between the US and China. On Thursday, markets were frightened as China fired several ballistic missiles around Taiwan in retaliation for a visit by US House Speaker Nancy Pelosi. China is also conducting aggressive military maneuvers.
“The aggressive tone emitted by Beijing in response to Pelosi’s visit to Taiwan has been a classic safe haven game in recent sessions, with gold and Treasuries rising along with the US dollar and Japanese yen,” he said. Han Tan, chief market analyst at Exinity Group.
This situation will continue to develop over the weekend, according to Marc Chandler, chief market strategist at Bannockburn Global Forex.
“China continues its military harassment of Taiwan as US President Biden pushes against a Senate bill that would recognize Taiwan as an ‘important non-NATO ally’ and strengthen its representation in international forums,” he said. Chandler said.
To learn more about the geopolitical tensions and their impact on gold, click here.
This was an encouraging upside for gold after a stronger US dollar triggered a selloff at $ 1,700 an ounce in July. On a technical basis, a close above $ 1,789 would be a solid sign of further gains on the way, according to strategists at TD Securities. “We estimate that prices closing above $ 1,789 / ounce would catalyze quite a change in momentum,” they said Thursday.
However, the big stumbling block is the July employment report out of the US on Friday. “With non-farm payrolls early tomorrow week, our expectations of a stronger-than-expected report could quickly put a cap on the upside prevalent among gold bugs, ”TD Securities’ added strategists.
Consensus requests from economists seek that the economy added 250,000 new jobs in July after creating 372,000 in June.
Hawkish Fed speakers also contributed to the rise in gold prices this week, pushing against the idea of ​​the US central bank moving due to rate hikes.
“One after another, they have remained true to the script that has been established. What we are seeing is a coordinated and well thought-out communication effort by the Fed. It is not intended to leave doubts as to whether the Fed intends to maintain rates rise until inflation goes down, regardless of the cost to growth and jobs, “said Win Thin, head of BBH Global Currency Strategy.
From the latest comments, Chicago Fed Chairman Charles Evans said the US central bank will likely continue to use oversized rate hikes until inflation falls. “If you really thought things weren’t getting better … 50 (basis points) is a reasonable rating, but 75 might be fine. I doubt more would be needed,” he told reporters on Tuesday.
San Francisco Fed Chair Mary Daly also said inflation is still an issue. The Fed has “a long way to go” before reaching its price stability targets, Daily said in a LinkedIn interview. “We are still steadfast and completely united,” she said.
St. Louis Federal Reserve Chairman James Bullard noted that “we still have some ways to go here to get to tight monetary policy.”
Additionally, Richmond Federal Reserve Chairman Thomas Barkin admitted that the Fed is willing to pay the price to keep inflation in check. “There is a path to keeping inflation in check. But a recession could occur in the process. If it does, we have to keep it in perspective: no one has canceled the business cycle,” he said.

24 hour live gold chart [Kitco Inc.]

What are the prospects for gold?
According to a growing number of analysts, gold is looking to resume its rally after peaking above $ 2,000 an ounce in March.
“Gold seems more likely to resume its lasting upward trajectory and breach resistance at around $ 2,000 an ounce than a support below $ 1,700,” said Mike McGlone, senior commodity strategist at Bloomberg Intelligence. “The most aggressive Fed tightening in 2022 since the 1980s has contained gold, and it’s a matter of time before rate hikes calm down, letting the metal resume its path of least resistance to the upside.”
CNBC’s Jim Cramer also updated his gold outlook this week, saying now is the perfect time to enter the gold trade after what he described as a “bizarre time” for precious metals.
Cramer quoted chart analysis by legendary market technician Larry Williams: “Williams finds that when small speculators get too bullish, it’s almost always a sign that we’re close to the top. But when they get too bearish, it’s almost always a sign. that we had a fund in our hands, “Cramer explained. “According to the latest Commitment of Traders report, small speculators are net long on 92,690 gold contracts, which is their smallest long position since May 2019, just before we got a big momentum on gold.”
Cramer’s point of view is not to bet against Williams when it comes to hitting a gold low. “The charts suggest gold may be ready to rally and it could be the perfect time to buy some,” she reiterated.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to trade in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article disclaim any liability for loss and / or damage resulting from the use of this publication.


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