Published: 2019.10.08. Gold Market Overview

Gold Market Overview - Preview

The price of gold is at a crossroads in the region of 1500-1510 dollars per ounce. From here, either up or down, and the catalyst is the monthly data on unemployment in the United States.

The unemployment data for the previous month is released in the United States every first Friday of every month. They are quite important, because the US Central Bank - the US Federal Reserve - has a “dual mandate”: to maintain both price stability and low unemployment by means of monetary policy. The logic is this: if unemployment began to grow, it means that we need to stimulate the economy by cheapening and increasing credit, and if inflation began to get out of control, then vice versa: tighten the monetary “nuts”.

This is our Russian Central Bank that has only one mandate - “inflation control”, it doesn’t give a damn about the economy, so it can be killed for decades with usurious interest rates and lending inaccessible to small and medium-sized businesses, under the sauce of “inflation targeting” (and then shrug and wonder, why the economy is not growing). But in America everything is different.

Therefore, monthly data on unemployment in the United States are extremely important: they are interpreted in the context of further actions by the Fed. If the data comes out weak, the market will begin to lay down further Fed monetary easing, and this will push the price of gold up. If the data come out strong, then this will mean that everything is relatively good in the economy, and there is no need to “stimulate” anyone. This could be a catalyst for gold sales. Of course, the logic of the market is far from being so linear and simple, but specifically, these data can affect the market in this way.

That is why the price of gold "froze at a crossroads" in the area of ​​1500-1510 dollars, waiting for these data as catalysts for the next movement.

A more global picture is that the price of $ 1,500 is an EXTREMELY important psychological “Rubicon”, fixing above or below which determines the further vector of long-term price movement. If the price is fixed above