Gold Key Points:
- Gold Prices (XAUUSD)[1] Extends Gains, up 1.6% for the Week.
- NFP Jobs Data[2] Exceeds All Forecasts, Adding Pressure on the Fed.
- Geopolitical Uncertainty Remains, Haven Bids Still in Play
How to Trade the Impact of Politics on Global Financial Markets[3]
Gold (XAUUSD)[4] prices surged ahead this week reaching a high of USD1794.23, 6.7% off the yearly lows with a rebound off support. Bullion surged 1.5% on Thursday and is heading for a run of three straight weekly gains after China fired missiles over Taiwan during military drills. Beijing has responded aggressively to US House Speaker Nancy Pelosi’s visit to the island this week, the highest-ranking American politician to go there in 25 years.
Gold (XAUUSD)[5] has benefitted from a weakening dollar, falling US bond yields and some haven support amid the ongoing geopolitical risks. Bullish comments from Federal Reserve officials pledged the central bank would continue an aggressive fight to cool soaring inflation. Loretta J. Mester, President of the Federal Reserve Bank[6] of Cleveland said on Thursday that the Fed should raise interest rates to above 4% in order to bring inflation back down to target. These comments had little effect on the price of gold[7] as haven demand persisted.
Source: Bloomberg
Surging US Job Growth Threatens to Derail the Bullion Rally
US employers added more than double the number of jobs forecast[8], illustrating rock-solid labor demand that tempers recession worries and suggests the Federal Reserve will press on with steep interest-rate hikes to thwart inflation. Treasury rates spiked higher on bets that the Fed will continue raising borrowing costs aggressively to cool demand and tame rampant inflationary forces.While strong hiring conditions may lead the Fed to
