Gold price ended the week in the green as signs of a slowing US economy heightened bets of a fresh record high in the short term. Granted, it recoded losses on Friday after March’s job report signalled that the economy is ‘down but not out’. While the record high may not be realized in the immediate term, it appears to be just a matter of time.
As has been the case in recent months, the US dollar is one of the influential drivers of gold price. As the financial markets digest the US jobs data released on Friday, the precious metal has further eased on its rally. The recorded losses come as the Treasury yields and US dollar rise.
Gold price tends to move inversely to the value of the US dollar as the surge of the latter renders the precious metal more expensive for buyers with foreign currencies. Similarly, higher Treasury yields increases the opportunity cost of holding the non-yielding bullion.
The benchmark 10-year Treasury yields rose by 3.58% on Friday as the US government bond prices dropped. This was the first session in the green after yields dropped for seven consecutive sessions.
The released jobs data signalled the steady demand for employees despite the weakening of US economy. Numbers released by the Labor Department showed that the economy added 236,000 jobs in March; slightly below the economists’ estimate of 239,000. At the same time, unemployment rate declined from 3.6% to 3.5%.
Recent economic data from the US signalled a weakening economy. That, coupled with the banking crisis, had investors betting that the Federal Reserve will soon pause on their interest rate hikes. However, the jobs report indicated that while the economy may be down, it is not out.
As it is, investors are betting that the central bank won’t hike rates after May’s meeting. These bets are what have continued to support gold price above the psychological zone of $2000 per ounce.
Gold price prediction
Gold price remains in the bull market despite the rally’s easing in recent sessions. In the short term, the previous resistance zone of 1,990 may render support to the precious metal.
As the market digests the recently released economic data, the bulls will be keen on yielding enough momentum to boost gold price past 2,009 to retest the YTD high of 2,033.69. For as long as the commodity continues to trade above 1,950, the bulls will remain in control.