Are Gold Prices in a Tug of War?

After surging to a 2-month high of $1,834 on the disappointing September nonfarm payrolls last week, gold plunged below the $1,800 psychological mark on dollar strength and rising US treasury bond yields on Tuesday. Are the bears back in town, or are the bulls just waiting for their next opportunity ?

A Recap of Gold’s Recent Trend

Looking back, the bright metal tested the key resistance at $1,834 for three times in the past few months but has failed to break above it. Not only did gold fail to go past this level, it even retreated to below $1,800 this week. Follow gold price movement here 

The rise in the US treasury bond yields is attributed to the massive plunge in gold. The yield on the benchmark 10-year treasury rose nearly 5 basis points from 1.322% to 1.369%, despite last Friday’s nonfarm payrolls missing market expectations by a great extent.

Does it mean gold bulls are not coming back?

Fed’s Dovish Remarks Give a Glimmer of Hope

At the Jackson Hole Symposium held last month, Fed Chair Powell mentioned if job growth continued, the Fed could begin cutting asset purchases this year. Ironically, the news was followed by a big miss in September’s nonfarm payrolls figures. Receive latest market updates on gold 

Strategists now believe the Fed would defer its tapering announcement to late 2021 or even early 2022. A weaker USD could push gold higher.

Other Upcoming Events in Focus

  • US Core Consumer Price Index on Sep 14 at 22:30 (GMT+10)
  • US Core Retail Sales (Aug) and Initial Jobless Claims on Sep 16 at 22:30 (GMT +10)

This article is prepared by Lucia Han from Mitrade and is for reference only. We do not represent that the material provided here is accurate, current or complete. The article content neither takes into account your personal investment objects nor your financial situation, and therefore it should not be relied upon as such. You should seek for your own advice.