Where we are: Gold (COMEX) is currently trading at 4544.4, up 0.68% on the day, carving out a range of 4492.6 to 4571.2 so far. This move sees XAU reclaim lost ground from yesterday, pushing back towards the upper end of its recent trading band. Bullion is attracting a bid after a moderate risk-off tone to the European session, seeing DAX and CAC both trade slightly lower as well as weakness in the S&P futures.
What’s driving it: A pullback in oil prices is helping to temper inflation concerns, easing some of the pressure for further Fed rate hikes. The weaker oil market is being compounded by a softer DXY, currently at 99.05, down -0.08% on the day. The moves in XAU are also being driven by central banks as it was flagged earlier that RBI may have sold gold to save FX reserves as well as gold overtaking U.S. treasuries as number-one reserve asset.
- CFTC data shows net non-commercial positions at +154,260 contracts, modestly long and at the 0th percentile (52w) — suggesting room for a squeeze higher if the narrative turns decidedly bullish.
- US 10Y yields are down -0.36% to 4.432% as the market looks to price in lower inflationary pressure in the short term.
- FirstFT reports that gold overtakes US treasuries as the world’s leading reserve asset.
NY session focus: The key event for the session will be the JOLTS job openings data at 10:00 ET; expect volatility around that print. A weaker-than-expected number could further weigh on the dollar and boost gold, targeting a break above the intraday high of 4571.2. Conversely, a strong print could reignite rate-hike fears, potentially driving gold back down towards the 4490 level. A break of the prior resistance may open the door towards 4600. The pain trade for gold would be a strong risk-on move alongside hawkish comments from a Fed official, triggering a sharp correction.