Precious Metals Steady as Markets Brace for US Labor Data (12.06.2024)

Gold rose to $2,640, recovering from recent losses, as markets awaited US labor data for Fed policy signals. Weekly jobless claims increased, hinting at a cooling labor market ahead of the nonfarm payrolls report. 

A 25bps rate cut in December is seen as 70% likely, supporting gold by lowering its holding cost. Meanwhile, China’s gold demand weakened for jewelry but remained strong for investment, though both may stabilize in 2024. Silver held above $31, buoyed by similar Fed rate cut bets and safe-haven demand due to global political turmoil. The euro and pound remain under pressure amid economic and political challenges.

Eurozone Instability Deepens with France's Government Collapse and German Elections

The euro hovered near $1.05, slightly above this week’s low of $1.049 but close to two-year lows. The currency remains pressured by political instability, weak economic data, and expectations of continued ECB easing. In France, the government collapsed after a no-confidence vote, while Germany prepares for early elections in February. Eurozone PMI data showed private sector contraction, and ECB President Lagarde warned of further growth weakness. Markets widely expect a 25bps rate cut next week, with growing speculation of a possible 50bps reduction.

The first resistance level is in the 1.0590-1.0600 range, and above this, the levels to watch are 1.0660 and 1.0720. On the downside, the initial support is at 1.0530, and if this is broken, the next levels to watch are 1.0500 and 1.0450.

Yen Strengthens with Rate Hike Promises

The Japanese yen steadied near 150 per dollar on Friday after data showed Japan's real wages were flat in October, improving from a 0.4% decline in September. The report strengthened expectations of a possible Bank of Japan rate hike, though opinions are split between December and January. BOJ Governor Kazuo Ueda hinted at a hike soon, citing strong economic performance, but board member Toyoaki Nakamura expressed doubts about wage growth sustainability, signaling potential opposition to a December hike. Markets now see a 60% chance of a 25bps hike this month, up from 50% recently.

From a technical perspective, 151.00 appears to be the key initial resistance level, with a break above it potentially targeting 152.00 and 153.00. On the downside, 149.40 is the first major support, followed by 148.70 and 148.20 if the price moves lower.

Gold Climbs as Markets Eye US Labor Data and Fed Policy

Gold rose to around $2,640 on Friday, recovering some losses as markets awaited key U.S. economic data to assess Fed policy direction. Initial jobless claims increased last week, signaling a gradual labor market slowdown, ahead of the U.S. nonfarm payrolls report due later Friday. Markets currently see a 70% chance of a 25bps Fed rate cut in December, which supports gold by reducing the cost of holding non-yielding assets. Meanwhile, the World Gold Council reported weaker physical gold demand in China but strong investment demand in 2024, with stabilization expected in 2025.

From a technical perspective, 2660 appears to be the key initial resistance level, with a break above it potentially targeting 2690 and 2710. On the downside, 2600 is the first major support, followed by 2575 and 2545 if the price moves lower.

UK Inflation Trends and Economic Weakness Shape BoE Policy Outlook

The GBP/USD pair traded near the mid-1.2700s during Friday’s Asian session, consolidating gains after reaching a three-week high. Traders are cautious ahead of the U.S. Nonfarm Payrolls (NFP) report, expected to guide the Federal Reserve’s December rate decision and influence the U.S. Dollar (USD). While lower U.S. Treasury yields have limited USD recovery, expectations of cautious Fed rate cuts and inflationary policies under President-elect Trump offer some dollar support. Weaker risk sentiment and geopolitical tensions also benefit the USD. Meanwhile, BoE Governor Andrew Bailey’s comments on potential 2025 rate cuts are tempering bullish sentiment for the British Pound (GBP).

From a technical perspective, 1.2760 appears to be the key initial resistance level, with a break above it potentially targeting 1.2830 and 1.2900. On the downside, 1.2610 is the first major support, followed by 1.2540 and 1.2470 if the price moves lower.

China Stimulus Speculation and Global Uncertainty Boost Silver Prices

Silver is trading around $31.30 on Friday morning. While it has had a generally positive week, it has been unable to break out of the range it has been in for the past four weeks. Continuous statements from the Fed suggesting it will not rush into rate cuts, combined with a lack of positive news from China, have kept silver under pressure. Today's upcoming Nonfarm Payroll data will also play a crucial role in determining its next move.

From a technical perspective, 31.50 appears to be the key initial resistance level, with a break above it potentially targeting 32.00 and 32.50. On the downside, 30.70 is the first major support, followed by 30.20 and 29.80 if the price moves lower.