Gold rises as purchasing interest picks up again after decline in US labour market.

  • Kedia Advisory
  • Commodities News
Gold rises as purchasing interest picks up again after decline in US labour market.
Credit: © Reuters.

Gold displayed resilience in yesterday's trading, recording a 0.41% uptick to reach 62440, driven by renewed buying momentum. This surge was prompted by the lacklustre U.S. labour market performance, with ADP (NASDAQ: ADP ) reporting the creation of only 103,000 jobs last month and a downward revision of October's employment data to 106,000 jobs. 

The dovish tone from Fed Chair Jerome Powell, coupled with soft data in the U.S. manufacturing sector, increased the likelihood of an interest rate cut in March 2024. Powell acknowledged the expected slowing effect of monetary policy on the economy, emphasizing appropriate tightening levels but leaving room for further adjustments if needed. The impact of U.S. policy tightening was evident in the persistently soft manufacturing PMI, maintained at 46.7 in November for the 13th consecutive month below the growth threshold of 50. Consequently, the odds of a December interest rate hike dwindled to 2.5%, while the probability of a rate cut in March and May surged to 64% and 90%, respectively. 

From a technical standpoint, Gold exhibited fresh buying dynamics, with a 0.62% increase in open interest to settle at 16657. This upward momentum was accompanied by a substantial price gain of 255 rupees. The current support level stands at 62245, and a breach could lead to a test of 62040 levels. On the upside, resistance is anticipated at 62610, with a potential breakthrough targeting 62770.

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