Gold Price Jumps Nearly $25, Is This The Start of A Breakout?
The comments below are an edited and abridged synopsis of an article by Anna Golubova
With the Fed’s tapering and new employment data out of the way, gold is finally moving. It jumped $25 on Friday, and December Comex gold futures were at $1,818.60, up 1.40% on the day.
Despite kicking off tapering this month, Fed Chair Jay Powell acknowledged uncertainty around inflation while stressing it is too soon to start reining in rates.
On the economic data side, gold rallied despite the US economy adding an impressive 531,000 positions. The unemployment rate dropped to 4.6% in October because of the unchanged participation rate, which remained at 61.6%.
With the Fed’s somewhat dovish tapering announcement and the jobs data in mind, the anticipated June rate hike is not likely.
If gold breaks above $1,800, there could soon be a $50 move. The key outside markets to watch will be the US dollar and the bond market. If they remain steady, gold will continue to be stuck in its range. If we see a lot of demand for the dollar and Treasuries, it will indicate a safe-haven response that gold would follow.
Also working in gold’s favour is the market potentially thinking the Fed has made a policy mistake.
Next week, the big data release will be the inflation number, with market consensus calling for October CPI to come in at 5.8% on an annual basis.
Markets will also be watching the Producer Price Index (PPI) and the initial jobless claims.