International gold prices slow down the pace of rise, investors wait for the key data
On Wednesday (October 5), the international gold price was under pressure, but it was not far from the new high of $1,729.35 an ounce set overnight since September 13. As investors avoided taking bigger action ahead of key U.S. jobs data. The data may affect the Fed’s policy tightening path.
At 15:40 Beijing time, spot gold fell 0.42% to US$1,718.68 per ounce; the main COMEX gold futures contract fell 0.18% to US$1,727.3 per ounce; the US dollar index rose 0.34% to 110.562.
The U.S. benchmark closed down more than 1.3 percent overnight, its biggest one-day drop since March 2020. Gold prices have risen nearly 4% over the past two sessions. A government survey released overnight showed U.S. job vacancies fell by the most in nearly 2-1/2 years in August, suggesting the labor market is cooling.
The Federal Reserve has aggressively raised interest rates in response to rising inflation, reducing jobs. Businesses have no choice but to delay capacity or invest in expansion plans to avoid taking on more loan interest. Investors are starting to bet that the Fed will ease the pace of policy tightening.
The US September ADP employment report will be released on Wednesday at 20:15 Beijing time. Followed by the US September non-farm payrolls data to be released this Friday (October 7), the market is expected to add 250,000 jobs, down from 315,000 in August.
“If the ADP data falls short of expectations, traders may assume a poor September nonfarm payroll and be bearish on the dollar, as traders have recently started betting on a Fed policy shift, which in turn favors gold,” said Matt Simpson, an analyst at City Index.
According to the latest data from CME Group, the open interest in the COMEX gold futures market fell by only 29 lots overnight; the trading volume resumed its downward trend, decreasing by regarding 10,800 lots. The strong rise came once morest a backdrop of falling open interest, suggesting that a sharp rally might take a breather in the short term.
The outlook for gold prices hinges on upcoming U.S. jobs data, which is expected to provide a clearer picture of how much the Federal Reserve will raise interest rates in November. According to CME Group’s “FedWatch” tool, markets are pricing in a nearly 70% chance that the Fed will raise interest rates by 75 basis points for a fourth consecutive rate hike next month.
