Gold prices surged over $60 in two days, returning to a three-week high. Why the sudden acceleration?
Spot gold fluctuated higher on Friday, May 10, rising briefly to $2375.41 per ounce during the European session, breaking above the $2360 and $2370 levels for the first time since April 22.
Time:
2024-05-13 08:48
On Friday, May 10, spot gold fluctuated higher, briefly rising to $2375.41 per ounce during the European session, breaking above the $2360 and $2370 levels for the first time since April 22.
As of press time, the spot gold price has slightly retreated to $2372.38 per ounce, with a daily increase of over 1.1%. It has cumulatively risen by more than $60 in the past two trading days and nearly 3% this week, potentially achieving its best performance in nearly five weeks.
Meanwhile, the price of the main gold futures contract also rose to $2377 per ounce, with a daily increase of over 1.6%.
Prior to this week, spot gold prices had fallen for two consecutive weeks, dropping from a historical high of $2431.78 to $2302, leading the market to believe that the soaring gold price had "hit the brakes." However, this week's significant rebound seems to have given investors hope for potential upside.
Tim Waterer, market analyst at KCM Trade, stated, "Gold's ability to regain its appeal this week is mainly due to some rather weak US macroeconomic data. Last Friday's weaker non-farm payroll figures and a series of reports indicate that the US job market may be starting to ease."
The report released last Friday showed that the seasonally adjusted US non-farm payroll employment increased by 175,000 in April, the lowest increase in six months and significantly below market expectations of 243,000. Additionally, the unemployment rate unexpectedly rose by 0.1 percentage points to 3.9%, while year-on-year wage growth slowed more than expected to 3.9%.
Analysis suggests that the overall weakness in non-farm payroll data is generally favorable for the capital market. The slowdown in wage growth is a sign of cooling inflation. After the data was released, the market restored expectations of the Federal Reserve cutting interest rates by 25 basis points twice this year, bringing forward the expected timing of the "first cut" from November to September, putting downward pressure on the dollar while boosting gold and other commodities.
Yesterday, the Labor Department reported that the number of initial jobless claims unexpectedly rose to its highest level since August: In the week ending May 4, initial claims increased by 22,000 to 231,000, while the median forecast among economists was only 212,000, further confirming signs of a cooling labor market.
Looking ahead to next week, the US will release April's PPI and CPI data. Waterer stated that the inflation report could serve as a guide for the timing of interest rate cut expectations. He also mentioned that if inflation is shown to be declining slightly, gold is likely to benefit.
In addition, persistent geopolitical risks may continue to support investment in gold. Shortly before press time, the Israel Defense Forces issued a statement saying that the IDF is still conducting targeted military operations in the eastern Rafah area and the Zaytun area southeast of Gaza City.
According to Egyptian media yesterday, citing senior sources, the two-day Cairo Gaza ceasefire talks have concluded, and Hamas and Israeli delegations have left Cairo. The source stated that after the departure of both delegations, the mediating parties are still working to narrow the gap between the two sides.
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