A stronger US jobs report at the end of last week led to a dollar rally and higher yields. But still, gold managed to thrive as it closed 0.7% higher on Friday and coming close to testing the $2,700 mark. The new week is still seeing price hold steadier, around $2,689 currently.
Gold (XAU/USD) daily chart
As mentioned last week:
“The risks for the next reaction in gold might be fairly asymmetric. If the US jobs report turns out to be softer and that weakens the dollar and Treasury yields, I reckon that will send gold soaring going into the week ahead. As for the opposite outcome on the data, it might not necessarily put too much of a dent in gold. That considering the stronger resolve of dip buyers to start the year.”
As it turns out, it didn’t put a dent at all on the resolve of gold buyers.
The animal spirits continue to run strong to start the new year, carried by the January seasonal tailwind. As we approach the $2,700 mark, the real test will be contesting the highs from late November and December last month around $2,721-26.
Will we see another rejection or will gold somehow continue to defy the odds and continue its upside trajectory since last year?