Gold Trades Cautiously Amid Labor Data and Gaza Talks
Written by Samer Hasn, Senior Market Analyst at XS.com
Gold is trading modestly today compared to this week with a downward trend and is settling near $2,727 per ounce.
Gold’s moves come after better-than-expected US data eased economic uncertainty, while focus returned to the Gaza ceasefire negotiations, which could help de-escalate regional tensions.
Between today and yesterday, we saw unexpected growth in durable goods orders and new home sales, better-than-expected manufacturing and services, and lower-than-expected initial jobless claims.
Core durable goods orders rose 0.4%, against expectations of a 0.1% contraction in September.
Services expanded slightly more than expected, while manufacturing contracted slightly less than expected in October in the latest S&P Global PMI report. While optimism about the coming global economic growth and interest rate hikes has pushed optimism about the future to its highest levels in 16 months in the services sector and to 9-month high in the manufacturing sector, this will strengthen the hypothesis of achieving a soft landing for inflation further, which may be a negative factor for gold in turn.
While sideways trading may prevail until the start of the flow of a set of labor market data in the US next week, which will strengthen expectations about the future path of interest rates. While markets expect with a probability of more than 95%, the Federal Reserve will make two rate cuts in each of November and December by 25 basis points at each meeting.
Far away, in the Middle East, talk has begun to return about reviving the stalled negotiations for a ceasefire in Gaza, and it may begin in the coming days with a meeting of senior officials in both Qatar and Doha. However, there is only a small chance of achieving a breakthrough in the negotiations before the presidential elections in the United States, according to officials who spoke to CNN.
While the low probability of reaching an agreement comes amid the refusal of the far-right ministers in Israel to stop the war and the increasing rhetoric about resettling northern Gaza, in addition to the lack of clarity in Hamas’s position and expectations that they will not hand over the hostages unless the war is stopped, which is also rejected by the far-right coalition.
Therefore, optimism about the possibility of achieving an actual breakthrough and stopping the war and regional escalation will be exaggerated unless we actually witness it.
Markets are still anticipating an Israeli attack on Iran in response to its unprecedented missile attack. Speculation is rife about the nature of this attack, the Iranian response to it, and the series of mutual responses.
Iranian officials told The New York Times that the Israeli attack caused extensive damage to Iran, which will push the Islamic Republic to attack more strongly than before, which may reach the point of launching 1,000 ballistic missiles, escalating attacks by its allies in the region, and disrupting energy supplies and navigation in the Strait of Hormuz. This would exacerbate the regional war and drag into deeper chaos and economic uncertainty around the world which could help gold achieve more historical levels.
