“Gold  falls after strong weekly US jobs data, US markets closed for Thanksgiving Day”.

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Thoughts for The Day: Gold was firm in Asia on Wednesday, rising to a high for the day of $2006 amid good trading volume following the release of the latest FOMC minutes on Tuesday night that underlined the prevailing expectations of a Fed pause in their interest rate hiking program. The yellow metal eased back to $2000 in Europe, with the AM benchmark in London set at $1999.90 and then fell to a low of $1988 shortly after the New York opening following stronger than expected weekly US jobs data and ended down 0.45% at $1990. The price has edged higher this morning to $1995 but we expect a low-key session in the absence of the US markets, that are closed today for the Thanksgiving Day holiday, and we expect a narrow trading range of $2000 to $1980. Silver tracked gold lower to end down 0.46% at $23.64, platinum fell 1.17% to $927, and palladium ended down 2.12% at $1064.

Market Commentary: November 23, 2023, (source Reuters)

• Gold prices edged higher on Thursday, hovering close to a key $2,000 per ounce level, as an overall weaker dollar and lower U.S. Treasury yields buoyed demand for bullion. Spot gold was up 0.1% at $1,992.59 per ounce, as of 0143 GMT, after hitting a three-week high of $2,007.29 on Tuesday. U.S. gold futures were steady at $1,993.30.
• The dollar DXY was down 0.1% against its rivals after gains in the last two sessions and making gold less expensive for other currency holders.
• The benchmark U.S. 10-year Treasury yields fell to a two-month low on Tuesday. Data showed orders for long-lasting U.S. manufactured goods fell a more-than-expected 5.4% in October, signalling an economy cooling considerably after hot third-quarter growth.
• The number of Americans filing new claims for unemployment benefits fell more than expected last week, but that likely does not change the view that the labour market is slowing amid higher interest rates. U.S. Federal Reserve officials agreed at their last policy meeting that they would proceed “carefully” and only raise interest rates if progress in controlling inflation faltered, the minutes of the Oct. 31-Nov. 1 gathering showed on Tuesday.
• Traders widely expect the Fed to leave rates unchanged in December, but dialled back expectations of rate cuts in 2024, according to CME’s FedWatch Tool. Lower interest rates decrease the opportunity cost of holding gold.
• SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.13% to 882.28 tonnes on Wednesday from 883.43 tonnes on Tuesday.
• Spot silver was flat at $23.63 per ounce, while platinum was little changed at $922.73. Palladium eased 0.1% to $1,056.63 per ounce.

Economic Analysis (Trading Economics):

• Durable Goods Orders – New orders for manufactured durable goods in the United States plummeted by 5.4% month-over-month in October 2023, reversing a 4.0% surge seen in September and significantly surpassing market expectations of a 3.1% drop. It was the second-largest fall in durable goods orders since April 2020, mainly driven by reduced demand for transportation equipment. source: U.S. Census Bureau
• The number of Americans filing for unemployment benefits fell by 24,000 to 209,000 on the week ending November 18th, dropping sharply from the three-month high in the previous week and well below market expectations of 225,000. In the meantime, continuing claims fell by 22,000 to 1,840,000 in the previous week, retreating from the two-year high hit in the previous report. The result indicates that the slowdown in the labor market has not fully materialized yet, allowing the Federal Reserve the flexibility to maintain interest rates at restrictive levels. The four-week moving average, which removes week-to-week volatility, fell by 750 to 220,000. source: U.S. Department of Labor

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