Wall Street sidelines in gold market as blockbuster NFP calls for 75 basis point Fed hike in September

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(Kitco News) – Gold Market Sees Third Week of Gains; however, sentiment is changing again as prices cannot rise above $1,800 an ounce, according to the Kitco News Weekly Gold Survey.

In the latest gold survey, some market analysts said Friday’s hit jobs report took the wind out of gold, at least in the short term.

Ahead of the latest survey results, the US Bureau of Labor Statistics said 528,000 jobs were added in July. The data far exceeded expectations of economists who predicted job gains of about 250,000. The report also notes a solid increase in wages.

While some analysts continue to see upside potential, many have taken more neutral and bearish positions. Retail investors remain solidly bullish on gold.

“The gold market has given us a taste of what the Fed’s pivot will look like, but the real pivot isn’t here yet,” said Adam Button, chief currency strategist at Forexlive. com. He is looking for lower prices in the short term. “Next week’s CPI is a big risk for gold and pretty much everything else.”

This week, 16 Wall Street analysts participated in the Kitco News gold survey. Among the participants, four analysts, or 24%, were bullish on gold in the near term. Meanwhile, seven analysts, or 41%, were bearish on gold. Six analysts, or 35%, voted neutral this week.

Meanwhile, 579 votes were cast in Main Street online polls. Of these, 379 respondents, or 65%, expected gold to rise next week. Another 124, or 21%, said lower, while 76 voters, or 13%, were short-term neutral.

The shift in sentiment on Wall Street comes as gold prices appear to end the week in roughly neutral territory, falling from a three-week high. December gold futures last traded at $1,789.10 an ounce, up less than 0.5% from last Friday.

Analysts said July’s jobs report alone changed market sentiment, with investors now expecting the Federal Reserve to maintain aggressive monetary policy in September.

“U.S. jobs data means the Fed is more likely to hike another 75 [basis points] next month. The luster of gold is lower. A break of $1750 might see $1725, but there is a reasonable chance it will see $1700,” said Marc Chandler, Managing Director of Bannockburn Global Forex.



CME tool FedWatch shows that markets now see more than a 70% chance of a 75 basis point move next month. Prior to the jobs report, markets were pricing in a 34% chance of an aggressive move.

Adrian Day, chairman of Adrian Day Asset Management, said he was neutral on gold for the next week as the latest jobs data will make gold investors much more cautious. However, he added that in the long term he remains optimistic.

Frank McGee, precious metals trader at Alliance Financial, said he was bearish on gold in the short term as the precious metal “can’t fight the Fed.”

However, some analysts remain bullish on the precious metal, noting that prices are still holding support. Jim Wyckoff said the market still has some technical bullish momentum that could push prices higher next week.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.

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