The price ofor (XAU/USD) is moving slightly into positive territory, hovering around 2 740 $ at the start of the Asian session this Monday. With weak job creation in October and major events to come in the United States, investors remain attentive to the evolution of this precious metal.
A week under high tension: between presidential election and monetary policy
The American economy has created 12,000 jobs in October, a figure well below expectations, marking the weakest progression since December 2020. This context could push the Federal Reserve (Fed) to consider a rate cut of 25 basis points during its meeting on Thursday, an anticipation which fuels hopes of a further rise in the price of gold.
Also read: Gold is at very high risk today
All eyes are also turning to the American presidential election scheduled for this Tuesday. Political uncertainties, coupled with persistent geopolitical tensions in the Middle East, reinforce the attraction of gold, perceived as a active refuge in troubled times. JPMorgan analysts also believe that any drop in gold prices would constitute a interesting buying opportunitywhatever the electoral result.
Employment figures: a signal for the Fed?
The latest employment figures released by the US Bureau of Labor Statistics reveal a marginal increase in non-agricultural jobs (NFP) by only 12,000 in October. This figure, well below the forecast of 113,000, accentuates expectations of intervention by the Fed to support the economy. Furthermore, the unemployment rate remained stable at 4,1 %confirming analysts' expectations.
These data, coupled with political uncertainties, are likely to strengthen demand for gold, especially as the appeal of high-yield bonds risks weakening if rates fall.
The dollar and American yields: a potential brake on the rise of gold
Despite a favorable context for gold, demand for dollars and rising bond yields could weigh on the precious metal. A strong dollar makes gold, denominated in dollars, less attractive to international investors. Furthermore, higher yields increase the attractiveness of interest-bearing assets, making gold relatively less competitive as a reserve asset.
Why does gold remain a popular investment in times of crisis?
L’or has always been a pillar of the global economy, used not only in jewelry but also as a store of value. It is seen as a hedge against inflation and a financial refuge when currencies lose value. In times of uncertainty, gold remains a prized value for its stability, regardless of economic or political ups and downs.
Central banks: major players in the gold market
Central banks are by far the largest buyers of gold, their aim being to support their currencies in times of economic crisis. In 2022, they added 1,136 tonnes of gold to their reserves, an acquisition estimated at around $70 billion, according to data from the World Gold Council. Countries like China, India, and Turkey are rapidly increasing their reserves, boosting the perceived economic stability of their currencies.
The correlation between gold and other assets
L’or presents an inverse correlation with the American dollar and U.S. Treasury bonds, considered major safe havens. A depreciation of the dollar generally benefits the precious metal, thus offering attractive diversification for investors. On the other hand, when stock markets are rising, the price of gold tends to weaken, while a massive sell-off of risky assets promotes demand for the yellow metal.
The main factors influencing the price of gold
The price of gold is particularly sensitive to geopolitical tensions and fears of recession, which fuel its status as a safe haven. As a non-yielding asset, its price also fluctuates depending on interest rate : a fall in rates generally supports the yellow metal, while an increase in the cost of money can be unfavorable. Finally, the evolution of the dollar plays a crucial role, with gold being valued in dollars (XAU/USD). A weakened dollar tends to push up the price of gold, while a strong currency stabilizes it.
This economic context, mixed with global uncertainties, makes gold an essential asset for investors seeking stability.
