By Joseph Dahrieh, Managing Principal at Tickmill
Gold was relatively stable, trading sideways near the USD 4,200 level. The market could consolidate after its rebound during the last few trading sessions. Gold could continue to find support in increasing expectations of interest rate cuts. Yesterday’s weak ADP Employment report showed a further contraction in private-sector jobs and reinforced expectations for a Federal Reserve rate cut at the December meeting, now priced at 87%.
However, investors could remain cautious ahead of new data releases. Today’s jobless claims data and tomorrow’s PCE inflation figures could introduce some volatility and could affect expectations. Both releases could either cement the dovish narrative or trigger a short-term retreat if they surprise to the upside.
However, downside risks for gold still appear limited. Central banks remain active buyers, with an estimated 53 tonnes of net purchases in October underpinning strong demand and providing a solid floor. Additionally, ongoing macro uncertainty, the soft US dollar, and geopolitical tensions could leave gold well supported.