Gold bulls stepped into higher gear on Thursday, propelling the precious metal past the psychological $1800 level as cooler-than-expected US inflation fuelled hopes of a less aggressive Federal Reserve.
The precious metal punched above $1800, a level not seen since mid-August due to the growing optimism over the Fed becoming less hawkish on rates. Bulls drew further support from a weaker dollar and falling Treasury yields. With the PCE price index for October printing below expectations, this is fuelling the speculation around inflation cooling.
All eyes will be on the US jobs report on Friday which could be the real market shaker. Markets expect the US economy to have created roughly 200,000 jobs in October while the jobless rate is expected to remain unchanged. A report that meets or prints below expectations may justify a change in the pace of the Fed’s policy tightening – ultimately supporting gold.
On the daily timeframe, gold prices are trading above the 50, 100 SMA, and 200 SMA. The solid breakout above $1780 opened the doors to $1800 with $1840, and $1858 acting as key levels of interest. Alternatively, a move back below $1800 could signal a selloff towards $1785, and $1735.