Tailwind for gold following weak US labor market data
Following publication of the US labor market data on Friday, October 6 and a short-term decline to 1,261 $/oz, the price of gold has risen steadily. On Friday, October 13, the yellow metal broke through the psychological barrier of 1,300 $/oz on the back of weaker-than-expected US inflation data. The closing price was 1,305 $/oz. The main reasons for the increase during the reporting week were Trump’s comments about scuttling the nuclear accord with Iran, the fifth fruitless round of Brexit negotiations and the search by investors for a safe harbor, as news agencies have reported that another North Korean missile test is imminent. The prices of all precious metals have been supported by the depreciation of the US dollar, which fell by 0.7 % over the course of the week. Market participants also said last week that in their view low inflation rates will likely persist over the longer term and urged the Fed to hold off on its planned rate hikes. There has already been some doubt that the Fed would really carry out its planned third rate increase in 2018. However, according to the CME FedWatch Tool, 90 % of respondents still expect a rate hike in December.
We see technical support at 1,255 $/oz (200-day moving average) for the coming trading week.