Gold fell 2.5 per cent on Friday, and more than three per cent from last week, after stronger-than-expected US employment figures for January boosted the dollar.
This could signal to the markets that the US Federal Reserve has a sufficient economic base for continuing to raise interest rates, spurring a rebound in the dollar and treasury yields.
With the release of US non-farm payrolls data last Friday, gold hit a low of around $1,860 per ounce, plummeting from the previous day’s closing price of $1,916 per ounce. Gold dropped $56 in this period from the effects of the growth in US jobs.
The change in non-farm employment data, according to forexfactory.com, was almost three times higher than forecast and twice the figure for the previous month, while the unemployment rate fell from 3.5 per cent to 3.4 per cent.
However, the gold price was moving with a light bullish momentum on Wednesday, with an opening price of $1,885.25 per ounce.
PP Link Securities business manager Long Samnang says gold will likely continue in an uptrend until at least the end of this week.
“Based on both the one-day and one-week charts, the trend is firmly set to go higher, moving between $1,876 and $1,956 per ounce.
“The dollar has been strong since the beginning of 2023 as the Fed remains committed to raising interest rates, with a current rate of 4.75 per cent set on February 1. A clear 0.25 basis points is expected to be added at the next Fed meeting on March 21.
“And with interest rates high and expected to rise further, traders holding dollars have greater confidence from such strong rates to sell the greenback at profit and invest in gold,” Samnang says.
For this week’s trading recommendation, Samnang suggests investors wait and buy gold when the price rises to $1,870 per ounce, setting the take-profit function at $1,888 per ounce and the stop-loss at $1,850.