$ 55 decrease in one day, and experts confirm that the decline is temporary, and gold is waiting for a strong performance this year
Cairo, February 5, 2023
The gold market witnessed significant losses on Friday on the global stock exchange, as the precious metal fell by $ 55 in one day after the issuance of a strong employment report that was higher than expected rates, as the US economy managed to add 517,000 jobs in January and reduce the unemployment rate to 3.4%, which is the lowest. level since 1969. This surprised many as only 185,000 new jobs were created.
Furthermore it , The US services sector exceeded expectations in January. As it rose to 55.2% after contracting in December, According to the latest data from the Institute for Supply Management (ISM).
Before the Friday employment report, Markets were looking forward to the Federal Reserve ending its hawkish policies by raising interest rates in March, But that is changing now. And gold is reacting to that, despite raising interest rates at a slower pace by 25 basis points on Wednesday. And the announcement of Federal Reserve Chairman Jerome Powell on progress in reducing inflation and the start of prices to decline again, but Powell admitted that the service sector did not yet feel the slowdown in inflation.
And after the best start to the year since 2012, which witnessed a jump for gold from 1700 dollars to above 1900 dollars, we see the current turmoil, which is topped by a state of uncertainty about the upcoming Federal Reserve decisions, and the path of least resistance for gold is to move down at the present time, as it is expected to continue trading Between 1800 and 1900 dollars.
The immediate support for the global price of gold is at the price of $1,870 an ounce, and if it does not hold at this point, affected by the expected events during the current week, gold will test the price of $1850 and then $1800, but the bullish expectations in general still remain despite the short downward trend. The range witnessed by the markets during the past two days.
And no matter what the Fed’s next decisions are, Gold will perform well during the rest of the year, as the current decline does not represent anything but a quick change in the short term and not a fundamental change in gold expectations.
There is a lot of data that markets have to absorb:
The fate of the markets is not only linked to the employment report. Rather, the Fed’s tone is difficult to predict its direction in the next stage. This is the main reason behind the impact on gold, as the central bank’s interest in buying gold is one of the most important factors that must be monitored during the first quarter of this year, after the US official sector bought 1136 tons in 2022, which is the largest amount it has bought since 1967. According to data from the World Gold Council (WGC), which supports gold as a safe investment.
Important events this week:
The next week will witness a set of events that will shape the next direction for the movement of gold in the markets, on top of which is the appearance of Federal Reserve Chairman Powell at the Economic Club in Washington next Tuesday, in addition to the unemployment support report scheduled for release on Thursday and the consumer confidence report scheduled for Friday. These events constitute general indicators of the performance of the US economy in general and influence the global investment movement in gold affected by those indicators.
