But it is also an anathema of sorts for the Fed as robust wage growth has added to the worst inflation in four decades. The number of available jobs for Americans came in well above expectations in September, with nearly two positions for every job-seeker, the Labor Department said Tuesday in its Job Openings and Labor Turnover Survey (JOLTS) report for September that appeared to complicate the Fed’s inflation fight.Ī sterling labor market has been one of the greatest redeeming qualities of the US economy over the past two years. Rates might need to stay higher for longer if the labor market is still healthy and inflation ends up being stickier than markets are initially thinking.” “Momentum was building on expectations for the Fed to downshift their tightening pace in December, but now that call seems like it may have been premature. In Tuesday’s trading, the dollar initially tumbled against a basket of six currencies led by the euro on speculation over the Fed pivot, then volleyed between positive and negative territory through the day as markets kept wavering on whether such a was indeed possible at this point.Įd Moya, analyst at online trading platform OANDA, doesn’t think the central bank is ready to relax anything, for now, adding: The Fed intends to add another 125 bp to rates before the year-end. Since March, the central bank has raised rates by 300 bp from an original base of just 25. Inflation, as measured by the Consumer Price Index, stood at 8.2% during the year to September, not too far from the 40-year peak of 9.1% noted in the 12 months to June. The Fed’s target for inflation is a mere 2% a year and it has said it will not back off on interest rate hikes until it achieves its aim. Investors have been on the edge since summer over the Fed’s aggressive rate hike regime that went from March’s 25 bp hike to 75 bp in June, which the central bank has maintained. But this requires clearing the immediate resistance of $1,660 first”. Now, the current rebound from the $1,615 base demand zone has enough room for an up move to test $1,690 and $1,723. “After a continuous drop from its unsuccessful breach of its all-time high of $2,073, gold has been falling continuously for seven months in a row. That’s an outcome that could severely cost gold longs, sending them back to the periphery of low $1,600 pricing, said Dixit. So, where could gold go between now and Friday?Īccording to the temperaments of technical charts at least, a test of $1,735 could happen on the high end if the September jobs data comes in weaker than expected, stirring speculation once again of a Fed pivot, said Sunil Kumar Dixit, chief technical strategist at .īut if the jobs growth is bigger than expected-coming close to or beyond September’s 263,000-then the Fed will almost likely stay the course with another 75 bp hike in December. Yet, continued hopes for a Fed pivot-a buzzword that simply means the central bank might opt for a lower rate hike than 75 bp-in December added to risk appetite across markets on Tuesday, despite the latest US labor data being unsupportive to that notion. ![]() The Fed is all but certain to deliver a 75 basis point (bp) rate hike on Wednesday, the fourth of its kind, as it keeps to a series of jumbo-sized rate increases to get inflation back to its target. ![]() In order for the central bank to do that, actual jobs growth for last month must be well below the 191,000 positions that economists think were created.Ĭharts courtesy of SKCharting, with data powered by Thus, the October jobs report will provide the earliest signs of whether the Fed is ready to start easing on rates by the end of the year. With the sixth US rate hike due to arrive later on Wednesday, the yellow metal has another epic hurdle to cross by Friday in the form of the October US jobs report.īeyond what the Fed does or says Wednesday, the so-called nonfarm payrolls report for October will determine not just near-term direction for gold and its nemesis, the dollar, but also set the tone for Fed action and speak-until the release of the November jobs report, which will arrive in time for the central bank’s next rate decision on Dec. Where could gold go in the next 72 hours? Gold could test $1,735 higher by Friday or lower $1,600, depending on outcome.If close to or above September’s 263,000, Fed will stay aggressive on rates.If below estimated 191,000, it will build hopes for a Fed pivot on rates. ![]() Aside from today's rate hike, attention on October jobs report.Create New Watchlist Create Create a new holdings portfolio Add Create + Add another position Close
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