Asian Trading Hours – Friday
During early Asian trading hours on Friday, the price of gold (XAU/USD) surged to $1,978, reaching its highest level since late July. The precious metal’s rally was bolstered by a weakening US dollar (USD) following dovish comments from Federal Reserve Chair Jerome Powell and an influx of safe-haven demand.
In contrast, the US Dollar Index (DXY), which measures the USD against six other major currencies, consolidated recent losses and hovered around 105.85. US Treasury yields edged higher, with the 10-year Treasury yield settling at 4.99%, marking its highest level since 2007.
Despite positive US job data released on Thursday, signaling the strength of the US economy, certain economic indicators painted a mixed picture. Weekly Initial Jobless Claims dropped to 198,000 for the week ending October 14, the lowest level since January. However, existing home sales fell by 2.0% month-on-month in September and declined by 19% year-on-year, reaching the lowest level since 2010. These figures suggested that higher mortgage costs were negatively impacting confidence in the housing market.
Federal Reserve Chair Jerome Powell indicated a desire to pause rate hikes and closely monitor economic data in the coming months. Powell also mentioned that further tightening of monetary policy might be appropriate if there is more evidence of above-trend growth and a tight labor market. His comments had a broad downward effect on the USD and provided a boost to USD-denominated gold.
With no major economic data releases from the US, market participants will focus their attention on speeches by Federal Reserve officials, including Logan, Mester, and Harker.
