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Gold: On a slippery ground below $1550 as trade sentiment stays positive

  • Gold remains on the back foot for the third consecutive day, nears four-day low.
  • Broad USD strength, expectations of no US-Iran war weigh on mixed geopolitical clues.
  • US employment data, trade/political headlines will offer a busy Friday.

Gold prices extend declines below $1,550, at $1,548.55 currently, during the early Friday. The yellow metal has been under pressure off-late, mainly due to the de-escalation of odds favoring the US-Iran war. Also contributing to the Bullion’s weakness is the strong US dollar.

In addition to the US lawmakers’ efforts to tame the President Donald Trump’s power to attack Iran, Tehran’s readiness to cooperate in an investigation concerning Ukrainian flight cash also limit expectations of the US-Iran war. Further, mild optimism in the words of Fed’s Robert Kaplan and Need Kashkari seems to add to the market’s risk-on.

Even so, the US President is using the support of the Canadian and the UK leaders to allege Iran for the death of 176 passengers, including some from Canada and Britain. Also challenging the market’s risk-off are reports of the Iraq-Syria fight around the border and the US President Trump’s signal to delay signing the phase-two deal with China.

While portraying this, the US 10-year treasury yields take the bids around 1.865% while S&P 500 Futures marks 0.20% gains to cross 3,280 by the time of writing.

While the risk-sensitive environment will keep trade/political headlines in the driver’s seat, the US monthly employment data will also be important to watch. “We see more downside than upside risk for payrolls in December after an exaggerated surge in November (266K and around 220K excluding returning strikers). Even our below-consensus 145K forecast implies a strong 189K average for Q4, above the 173K average for the first nine months of the year, so the December reading could be even weaker without necessarily signaling a major slowing in the trend,” says TD Securities.

Technical Analysis

Buyers will look for entry beyond the support-turned-resistance, September month high, of $1,557 whereas sellers will now keep eyes on September 24/25 tops near $1,535 ahead of targeting the November month peak, at $1,515.38.

 

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