On the inaugural trading day of 2024, the price of gold (XAU/USD) has exhibited a positive trend during the early Asian session on Tuesday. The yellow metal’s upswing is attributed to the weakened US Dollar (USD) and encouraging developments surrounding China’s economic stimulus measures. As of now, gold is trading around $2,065, reflecting a 0.19% increase for the day.
The positive momentum in gold is underpinned by the prevailing sentiment that the US economy may be on the verge of entering a recession, coupled with expectations of potential rate cuts from the Federal Reserve (Fed). This outlook has placed downward pressure on the Greenback and buoyed USD-denominated commodities, with gold being a notable beneficiary.
Market participants are eagerly awaiting the release of the December jobs data on Friday, particularly the US Nonfarm Payrolls (NFP). Projections suggest an anticipated increase of 163,000 jobs in December, compared to the 199,000 reported in November. Concurrently, the Unemployment Rate is expected to rise to 3.8%, while December’s Average Hourly Earnings are forecasted to grow by 0.3% MoM. Any deviation from these expectations, particularly weaker-than-anticipated data, could exert selling pressure on the Greenback.
Recent economic indicators have added to concerns about the US economic outlook, with the US Chicago Purchasing Managers’ Index (PMI) for December registering at 46.9, significantly lower than the previous reading of 55.8 and below the market consensus of 51.0.
Over the weekend, Chinese Communist Party Chairman Xi Jinping made ambiguous statements regarding support for the Chinese economy. Jinping emphasized the government’s commitment to consolidating and enhancing the positive trend of economic recovery, aiming for stable and long-term economic growth. He highlighted the need for deepening reforms, fostering confidence in growth, and intensifying efforts in the realms of education, science, and technology to nurture talent.
Looking ahead, gold traders are keeping a close eye on the US S&P Global Manufacturing PMI scheduled for release later on Tuesday. Additionally, the Federal Open Market Committee (FOMC) minutes later this week will be a pivotal event, setting the stage for the highly anticipated US Nonfarm Payrolls (NFP) report on Friday. Traders will scrutinize these developments for potential trading opportunities around the gold price, reacting to cues from economic data as the market navigates the intricate landscape of precious metals.
