How Did The Prices Of Gold Started To This Week?
The data that came out last week indicated that the US economy is starting to slow down. We saw weakening ISM manufacturing data, lower than expected ADP private sector employment data, and higher than expected weekly jobless claims data. All the data that came out during the week turned the market's attention to the non-farm payroll data that was due to be released on Friday. After the disappointing ADP private sector employment data, the market expected the non-farm payroll data to also be weak. In March, the US economy created 236K new jobs outside of the agricultural sector, slightly above expectations. Looking at the average hourly earnings data that the Fed follows in terms of the labor market's impact on inflation, we can see that the upward trend has become more stable. The US Bureau of Labor Statistics (BLS) releases these data.
Looking at the details of the BLS report, we see that although the non-farm payroll data exceeded expectations and the unemployment rate fell to 3.5% above expectations, there were job losses in some sectors of the US economy, including construction and manufacturing. These two sectors may become the weak points of the labor market in the coming weeks. When we put all of this together, we see that the market is focused on the headline non-farm payroll data, and the moderate labor market strengthens the Fed's pricing. We saw the US dollar gain strength globally, while the price of gold started declining in the early hours of the Asian session. The $2,000 level is being closely watched as a critical support level for the price of gold. Although the price of gold may fall below this level at the beginning of the new week, we do not see any change in the medium-term upward trend in the price of gold. We maintain our view that possible pullbacks could be considered as buying opportunities. The recent pullback can be seen as a correction in a bullish trend with significant volume.
Will the Rise in Spot Gold Continue?
After the labor market data released last week, the US consumer inflation data to be announced this week has become quite important for global markets and the Fed's interest rate projections. The US consumer inflation data to be announced on Wednesday and the March FOMC meeting minutes are prominent in market pricing this week. March consumer inflation will be closely monitored to see if the price pressure continues and whether it will decrease the Fed's appetite for interest rate hikes. Despite seeing a decline in headline inflation after reaching its peak in July, the core side continued its stubborn trend. It is expected that the annual basis of headline inflation will decrease from 6% to 5.2% and show an increase of 0.3% on a monthly basis. On the core side, it is expected that the annual inflation rate will rise from 5.5% to 5.6% in response to a 0.4% monthly increase. It is expected that consumer inflation data that exceeds expectations may create pressure on the spot gold price. A data point that may indicate a slowdown, especially on the core side, that is below expectations may support the rise of gold. Support levels for spot gold can be monitored at 2,000 and 1,960 USD, while 2,040 and 2,070 USD are resistance levels to follow if the upward trend continues.
