Gold prices weakened on Friday after a brief surge following lower-than-expected Nonfarm Payrolls data release. The precious metal received safe-haven support amid renewed hostilities in the Middle East.
Gold initially rose to the $2,760s after the NFP data showed a decline to only 12K in October, well below the expected 113K and the previous month’s 223K. However, it later dropped to the $2,740s as mixed data from the US Institute of Supply Managers (ISM) had an impact.
The ISM Manufacturing PMI fell to 46.5 in October, below the expected 47.6, indicating a decline in activity. However, the ISM Manufacturing Prices Paid Index rose to 54.8, above expectations, potentially impacting the sell-off in Gold as higher prices could reduce the probability of the Federal Reserve aggressively cutting interest rates.
The lower-than-expected NFP data reflects concerns about the US labor market, which could lead the Fed to reduce interest rates more aggressively in upcoming meetings. This could benefit Gold as it decreases the opportunity cost of holding the non-interest paying asset, making it more appealing to investors.
In addition to economic data, Gold also rebounded due to safe-haven demand following renewed hostilities in the Middle East. A Hezbollah rocket attack in northern Israel and intensified bombing in Beirut by Israel led to increased uncertainty, boosting demand for the precious metal.
Gold’s technical analysis shows a recovery after a pullback into its former range between $2,708 and $2,758. The precious metal remains in a steady uptrend across all time frames, increasing the potential for more upside. However, a steep decline from recent peaks and bearish momentum indicators suggest a possible downside risk before the uptrend resumes.
Looking ahead, a break above the $2,790 level could lead to a move towards resistance at $2,800 and $2,850. The ongoing global uncertainties, including the US presidential election, and economic indicators like the ISM Manufacturing Prices Paid Index will continue to influence Gold prices in the coming sessions. Investors should monitor these factors closely to make informed decisions in the Gold market.
