Gold market rebounds amid weakening US labour market and dollar decline

The value of the gold market experienced a slight increase yesterday, reaching above US$1,820 per ounce. This followed an eight-day decline which was influenced by the high US bond yields and the strengthening dollar. The rise was a response to a weakening labour market in America.

On yesterday morning, spot gold had risen by 0.3% to US$1,827 per ounce. This was seen as an attempt to recover from its lowest point since March when it fell to US$1,818.50 on Tuesday. Concurrently, US gold futures experienced a 0.4% increase, amounting to US$1,841.20.

Data yesterday revealed that US private payrolls did not increase as much as anticipated in September. This alleviated fears regarding a potential interest rate hike by the Federal Reserve. In fact, the US labour market experienced a decline to its lowest point since June 2021, with only 10.3 million jobs. This was significantly less than the expected 11.1 million.

In response to the labour market figures, US 10-year bond yields fell from their 16-year peaks. Additionally, the dollar weakened by 1.31% within a single day, marking the most significant drop since the Covid-19 outbreak in 2020.

Thailand’s leading gold trader, YLG Bullion International, reported that gold prices had risen by US$26.10 an ounce on October 4. This upward trend continued till yesterday, with prices rising by 5% to 6% to US$1,820 to US$1,830 per ounce before retracting.

Declining Gold Prices

However, investors started selling to turn a profit, resulting in resistance between US$1,843 to US$1,861 per ounce. YLG suggested that if prices cannot maintain this level, it might lead to increased selling pressure.

Factors to watch for in gold trading include US non-farm payrolls, the trade balance, and the Purchasing Managers Index for the service sector. These are all scheduled for release later this week, reported Bangkok Post.

In Thailand, gold prices fell 3.5% to 31,900 baht per gold baht weight due to the baht strengthening to 36.82 yesterday morning, from 37.05 on Wednesday. Short-term support is expected at 31,800 baht per gold baht, with resistance at 32,100 baht.

The gold market is under pressure due to anticipation that the Fed will sustain high interest rates for a more extended period, leading to a downward trend in gold prices.

MTS Gold, the gold broker, projected a continued decline in gold prices, stabilising around $1,820 an ounce. The firm advises investors to await a market rebound to sell and to buy when the market is oversold.

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