James Hyerczyk
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Comex Gold

Gold futures are inching higher on Thursday as investors try to recover from three straight sessions of setbacks. Traders have their hands full this week with Treasury yields, the U.S. Dollar and Euro driving the price action.

Today’s focus will be on the European Central Bank’s meeting which is expected to signal a tapering of its emergency.

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At 11:25 GMT, December Comex gold is trading $1800.40, up $6.90 or +0.38%.

Later today at 12:30 GMT, traders will get the opportunity to react to the latest report on U.S. Weekly Unemployment Claims. Several Fed speakers are on tap at about 15:05 GMT and FOMC Member Williams speaks at 18:00 GMT. He could trigger a volatile reaction in the gold market.

Euro Moves to Forefront

The Euro is trading higher against the U.S. Dollar on Thursday shortly before the European Central Bank’s (ECB) monetary policy announcements at 11:45 GMT. Central bank policymakers are expected to reduce the pace of the ECB’s bond buying. Meanwhile, gains are likely being capped by concerns about the global economy, which is encouraging investors to seek shelter in the U.S. Dollar.

With the Euro Zone economy roaring back to life, the ECB will debate a cut in its stimulus on Thursday, beginning a hard-fought and lengthy discussion on how to dismantle the crisis-fighting measures that have kept the bloc afloat, Reuters wrote.

The ECB has provided record monetary support for the Euro Zone since the start of the pandemic. But economic growth in the bloc is now solid, unemployment is falling and inflation is on the rise, setting the stage for a debate that will chart the bank’s course for years to come, according to Reuters.


Treasury Yields Ebb Lower on Growth Concerns

U.S. Treasury yields ebbed lower on Thursday morning, amid weak employment data and concerns about economic growth due to the spread of the delta variant.

The Labor Department’s latest Job Openings and Labor Turnover Survey (JOLTS) on Wednesday showed job openings outnumbered the unemployed by more than 2 million in July. The Federal Reserve watches the JOLTS data closely for any signs of slack in employment.

Additionally, in its latest “Beige Book,” released on Wednesday, the Fed said rising inflation was being exacerbated by a shortage of goods and that this would likely be passed onto consumers in many areas.

The Fed also said that growth overall had “downshifted slightly to a moderate pace” amid rising public health concerns during the July-through-August period that the report covers.

Daily Forecast

Gold is usually driven by the U.S. Dollar, but today, the Euro could have a bigger influence on gold prices. Ultimately, the longer-term direction of gold depends on the direction of U.S. Treasury yields, but at least over the short-run the ECB decision could dictate the terms.

A miss in today’s jobless claims report could also drive gold prices higher, unless investors decide to move into the dollar for safety.

We’re looking for a two-sided trade with a downside bias. Technically, look for an upside bias on a sustained move over $1800.00 and a downside bias under $1795.00.

For a look at all of today’s economic events, check out our economic calendar.
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