Long Samnang, Business Manager at PPLS.
Gold prices have fluctuated in a bearish trend for nearly three weeks, supported by the possibility of continued US interest rate hikes and gains in the dollar index, which traditionally moves inversely against the safe-haven asset.
As of Tuesday, the gold price had plunged from $1,947 to $1,822 per ounce, a decline of $125.
Despite the downturn technically indicating fatigue in the trend, the market was still reluctant to launch any buy-back positions as the greenback’s supporting fundamentals remained valid with a long-term effect.
Reuters reported last Saturday on two main indicators suggesting the Federal Reserve is likely to continue with higher interest rates.
“The dollar was on track to post its biggest quarterly gain in a year on Friday and gains for the 11th consecutive week as investors priced in the likelihood of a still solid economy and higher rates for longer.
“The greenback retraced most earlier losses against a basket of currencies to be only slightly lower on the day, following data showing that US consumer spending increased in August, but underlying inflation moderated, with the year-on-year rise in prices excluding food and energy slowing to less than four per cent,” it said.
The London-based news agency added: “The dollar has gained on expectations that the US economy will remain more resilient to higher interest rates and oil prices than other economies, after the Federal Reserve last week warned it may hike rates further and is likely to hold them higher for longer.”
There was also the release in the week of US economic data supporting the dollar such as ISM Manufacturing PMI and JOLTS Job Openings.
And the market awaits the US employment news for September scheduled for release on Friday to see if gold will rebound or continue its downward trend.
According to Forexfactory, US job figures such as the Average Hourly Earnings and Unemployment Rate were forecast to be more optimistic than the previous month, while the Non-Farm Employment Change was predicted to be lower.
With these forecasts supporting both bearish and bullish trends for the dollar, gold traders should wait before acting as the market is hesitant to make a decision at this time.
