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  • Firming Fed rate cut expectations provided a goodish lift on Thursday.
  • Improving risk sentiment kept a lid on any strong follow-through.
  • All eyes remain glued to Friday’s important release of the NFP report.

Gold edged higher through the early European session on Friday, albeit remained well below the overnight swing high to over one-week tops.
The precious metal built on this week’s recovery move from near two-month lows and got an additional boost on Thursday following the disappointing release of US ISM non-manufacturing PMI. In fact, the index fell to its lowest level in over three years and further raised the probability of a further monetary policy easing by the Fed.

Sliding US bond yields/weaker USD supportive

Markets are currently pricing more than 80% chance of yet another interest rate cut by 25 bps at the upcoming FOMC meeting in October. The same was evident from a sharp intraday slump in the US Treasury bond yields, which coupled with some follow-through US Dollar selling bias provided a goodish lift to the non-yielding yellow metal.
However, a late rebound in the US equity markets dented demand for traditional safe-haven assets – including Gold – and prompted some fresh selling at higher levels. The spillover effect was seen on Friday, though a subdued USD demand – amid the ongoing slide in US bond yields, underpinned demand for the dollar-denominated commodity – Gold.
Despite the uptick, bulls lacked any strong conviction and seemed reluctant to place any aggressive bets ahead of Friday’s key release of the US monthly jobs report, popularly known as NFP, which might now play a key role in determining the commodity’s next leg of directional move.

Technical levels to watch