Gold prices had another weak day Tuesday, with new selling coming in around the $3,385 area. Just before noon trades were reported at $2,045.90 per ounce, a multi-week high for the gold market. It wasn’t long before it came under renewed pressure and lost much of the ground it gained the first day. Traders are re-adjusting ahead of Friday’s all-important U.S. Non-Farm Payroll (NFP) figures. This possible change in the market, particularly hegemonic gold prices, could strongly affect market conditions.
In reaction, the U.S. Dollar gained new legs of demand, gliding the greenback higher against its counterparts. In particular, the GBP/USD cross reversed back down towards 1.3550, due to the USD’s strength suppressing the positive impact of UK macro strength. The dollar’s recent rebound is due to increased US-Canadian trade deal optimism. On top of all this, a similar positive vibe is forming on the U.S. and European Union’s side of the pond. These events have offered some respite to the U.S. Dollar and have shaped market moods around the currency pairs.
At the same time, the Japanese Yen is still seemingly on the ropes, unable to gain any foothold off its recent historical lows. The USD/JPY pair is still well under the 143.00 level. This trend illustrates the U.S. currency’s relative strength versus the Yen. Analysts point out that the Japanese Yen is very weak right now. Increasing expectations of future rate increases from the Bank of Japan offer some protection.
Gold prices are still telling this complicated market story, staying down in the face of mild U.S. Dollar strength. Even in this recent decline, analysts continue to assert that gold is still poised for a bullish breakout.
“Gold price remains depressed amid modest USD strength; bullish potential seems intact.” – www.fxstreet.com/markets/commodities/metals/gold
Traders are looking to predict and adapt to uncertain economic conditions. As they are, gold and currency pairs will probably continue to be volatile in anticipation of important economic releases later in the week. The anticipation surrounding the U.S. NFP data is expected to drive further market movements, especially as investors seek insight into economic recovery trends.