GCAP GOLD assesses that gold prices continue to face pressure from the direction of U.S. monetary policy, following signals from Federal Reserve Chair Kevin Warsh to continue controlling inflation. This has led the market to increase the probability of an interest rate hike at the September meeting to about 60%, up from 35%, while also supporting bond yields and a stronger dollar, which are factors pressuring gold in the short term. However, the fragile U.S. labor market may force the Fed to strike a balance, as July non-farm payrolls fell by 23,000 positions, and employment figures for May and June were revised down by a total of over 103,000 positions. The key factor to watch is the August Nonfarm Payrolls data due this Friday, which the market expects to increase by 58,000 positions, with the unemployment rate holding steady at 4.1%. If the data comes in strong, it will add further pressure on gold, but if it is weak, it could open the door for a gold recovery. The recommended strategy is to "wait to buy when the price forms a base," keeping an eye on support levels at $4,300/$4,235, or Thai gold around 67,800–67,000 baht, with profit-taking targets at $4,425–$4,450, or Thai gold around 69,700–70,000 baht. If it holds above $4,500, it would be a positive signal for a recovery trend.
Fed signals rate hike, raising policy rate expectations.
Rate hike expectations support higher bond yields.
