By Bas Kooijman, CEO and Asset Manager of DHF Capital S.A
Gold was trading in a range today, hovering just above the USD 4,200 level. The metal could consolidate after its rebound during the last few weeks. While it remains below its all-time high in October, gold could remain in a bullish configuration, although market participants could remain cautious ahead of key US labour market data releases.
The looming release of the ADP Employment Change and ISM Services PMI could affect sentiment. Consensus for ADP is relatively soft at around 5k new jobs. A weaker print would reinforce the dovish Fed narrative. Markets are already pricing in roughly an 87% probability of a 25 bps rate cut at next week’s FOMC meeting, which could continue to support the metal. Conversely, stronger-than-expected data could revive the US dollar and push bullion below the USD 4,200 area.
Investor attention could then shift to Friday’s delayed September PCE data for further confirmation on the Fed’s policy path. At the same time, expectations that White House economic adviser Kevin Hassett could be nominated to succeed Jerome Powell as Fed Chair are adding to the perception of a more dovish medium-term policy framework, which could remain positive for gold.