September’s mixed US jobs report has offered investors a ray hope after a rough week filled with uncertainty and gloom. This positive sentiment is being reflected in the Dollar’s valuation, US stocks and falling Gold prices. Although the US economy only added another 136,000 jobs in September and average earnings cooled to an annual pace of 2.9%, the bright spot was the unemployment rate which dropped to a 50-year low at 3.5%. While today’s report is unlikely to derail the Federal Reserve from cutting interest rates in October, it could shape rate cut expectations for December.
Gold prices initially dipped below the $1500 level following the mixed US jobs data. While easing concerns over the health of the US economy should reduce the metal’s allure as investors prepare for the weekend, the downside will be limited by core market themes straining risk sentiment.
For as long as concerns over slowing global growth, political risk, trade uncertainty and Brexit drama among many other geopolitical risk factors stimulate risk aversion, Gold bulls will remain in the driving seat.
Focusing on the technical picture, the precious metal has further upside potential. Bulls just need to secure a solid weekly close above $1500 to trigger a move towards $1515 and $1525.
Taking a look at oil, prices staged a rebound towards $53.10 on Friday and this has nothing to do with a change of sentiment towards the commodity. Given how global growth concerns and rising US Oil inventories are bringing demand-side dynamics back into the picture, Oil is positioned to extend losses. A flare up in US-China trade tensions is likely to fan concerns over the global economy, ultimately igniting fears around falling demand for Crude. While geopolitical tensions may spark negative supply side shocks, this will ultimately be countered by demand-side themes.
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