Gold prices surged 0.85% to close at $2,516.05 USD/oz yesterday (05/09/2024). The strong performance in the gold market is attributed to the ADP employment report, which came in far below consensus estimates, making a 50-basis-point rate cut more likely.
From yesterday's price movement, we can conclude that market sentiment is more positive nowadays. This aligns with our plan stated last week: it is a good sign when bad news emerges but the market continues to rise, as it suggests that investors are confident the Federal Reserve can avoid a recession through monetary policy adjustments. However, it's worth noting that the jobless claims data released yesterday actually met consensus estimates. Therefore, although ADP employment data is often considered a precursor to the NFP report, there's also a possibility that the market's optimism stems from the jobless claims meeting expectations, rather than confidence in the Fed.
That said, we should pay close attention to tonight's (06/09/2024) NFP and unemployment rate data, which are far more significant and will critically impact the gold market and other markets as well. Sticking to our original plan, we need to observe market sentiment and reactions, particularly if bad news emerges but prices continue to rise. This could indicate that the market has already priced in the bad news and is beginning to recognize that the situation isn't as severe as initially thought.
In conclusion, we must always remember that it's a bullish sign when bad news is released, but the market keeps going up.
From a technical analysis perspective, gold is clearly still in a major uptrend, with minor support identified around the $2,474 level. Over the past 2 to 3 weeks, the price has been moving sideways, likely due to the market waiting for tonight's data release and the upcoming FOMC decision in two weeks.
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