October 8, 2021

Gold Waits For Time To 'Explode'

 Investors are refraining from placing large positions ahead of the release of US NFP jobs data that will serve as an indication for the Federal Reserve’s (Fed) stimulus easing timeline.

Spot gold traded hovering at $ 1,760 per ounce during the Asian session, while gold futures traded at $ 1,759 per ounce.

Although the USD movement was seen as weak, the precious metal failed to capitalize on the opportunity to rise higher.

This is because, higher 10 -year US bond yields have stifled the movement of the yellow metal. Treasury yields rose close to 1.6% in the Asian session, the highest level ever recorded since early June.

The market expects the U.S. economy to add as many as 500,000 jobs in September. This is further supported by a series of data released this week, which show positive readings.

The Fed has previously hinted that a reduction in bond purchases could be implemented as soon as November if the September jobs report is satisfactory.

A reduction in stimulus and higher interest rates will increase bond yields, which will make the opportunity cost of holding gold also increase.