Gold Prices Fall in Response to Rising Yields, USD Post-FOMC

Bumper Jobs Report Delays Rate Cut Expectations

Non-farm payrolls for January surprise, creating 353k jobs, beating the expected 180k.

December data revised upward, showing a strong and robust job market.

The unemployment rate remains at 3.7%, contrary to the expected 3.8%.

The labour market is closely watched as efforts to control inflation continue.

US Yields Surge After Powell’s March Rate Cut Pushback

Shorter-term US government yields rise sharply after the positive job report.

Gold faces a headwind as it typically moves inversely to US yields and the dollar.

Chart highlights gold’s decline in response to the recent rise in US 2-year bond yields.

Fed Chair Powell confirms three rate cuts in 2024 but downplays March as the first cut.

Powell suggests incoming inflation data could support rate cuts in the coming months.

Gold Prices Drop Amid Dollar Strength

Gold prices fall, unable to close above the $2,050 psychological level.

Short-term bearish momentum continues into the new week.

Can gold breach the 50-day simple moving average (SMA)?

Intraday breach of SMA during the London session indicates potential weakness.

Gold prices are influenced by various factors, including a stronger dollar and higher US yields.

The dollar’s strength weighs on gold, while higher yields make the metal less attractive.

Gold looks to test support at $2,010, with a secondary level at $1,985.
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This analysis relies on chart patterns and key support/resistance levels.

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The Context of Non-Farm Payrolls (NFP) Data

January’s NFP data exceeded expectations, creating 353k new jobs.

Significant upward revision of December data emphasizes the sustained strength of the labour market.
The unemployment rate holding at 3.7% contradicts forecasts, revealing a resilient job market.

The labour market’s resilience becomes crucial as restrictive monetary policies aim to curb inflation.
Impact on US Yields and Powell’s Statements

US government yields, particularly towards the shorter end, experience a sharp rise post-NFP.

Gold, reacting inversely to US yields and the dollar, faces a challenging environment.

Visual representation on the chart underscores the negative correlation between gold and US 2-year bond yields.

Powell’s confirmation of three rate cuts in 2024 affects market sentiment, but he plays down March as the first cut.

Powell’s guidance on incoming inflation data hints at potential rate cuts in the upcoming months.

Gold prices, failing to close above $2,050, signal a continuation of short-term bearish momentum.

The challenge lies in breaching the 50-day SMA, with an intraday breach suggesting vulnerability.

Various factors influence gold prices, with the stronger dollar and higher US yields being significant contributors.

The dollar’s strength puts pressure on the dollar-priced commodity, while higher yields reduce gold’s attractiveness.

Key support levels at $2,010 and $1,985 become crucial points to watch for traders.
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Understanding the intricacies of gold trading requires knowledge of chart patterns and support/resistance levels.

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Conclusion: Navigating Challenges in Gold Trading
Positive job data has delayed expectations of an imminent rate cut, impacting gold prices.

The surge in US yields and Powell’s statements exert additional pressure on the precious metal.

Dollar strength and higher yields contribute to the ongoing decline in gold prices.

Traders closely monitor key support levels, with $2,010 and $1,985 serving as critical thresholds.

For traders navigating the complexities of gold trading, our dedicated trading guide provides in-depth insights.

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