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James Hyerczyk
Comex Gold

Gold posted a choppy two-sided trade on Friday, but is still in a position to post a second consecutive weekly loss. The price action suggests that traders have fully priced-in the latest round of global central bank rate cuts and are now waiting to see if those cuts are having an impact on the global economy.

The price action also indicates that gold may be fairly priced with investors unwilling to chase the market higher unless economic data continues to worsen and the central bankers are forced to make even more aggressive cuts in their benchmark rates.

At 18:31 GMT, December Comex gold is trading $1517.10, down $8.40 or -0.55%.

Gold traded lower early in the session as Treasury yields rose along with demand for risky assets, and the U.S. Dollar firmed, making the dollar-denominated asset less-appealing.

However, gold turned positive on Friday following the release of a weaker-than-expected U.S. non-farm payrolls report at 12:30 GMT. The news put pressure on the U.S. Dollar, while increasing appetite for the safe-have bullion.

The U.S. Labor Department’s monthly employment report showed job growth slowed more than expected in August, average hourly earnings came in higher than forecast

After the release of the report, Federal fund futures implied that traders saw a 96% chance for a 25 basis-point rate cut from a current rate of 2.00-2.25% by the central bank this month.

Gold hit its high for the session and turned lower late in the session after Federal Reserve chief Jerome Powell said the central bank would “act as appropriate” to sustain an economic expansion that has been pressured by uncertainty over global trade.

Stocks inched higher on the comment, but yields held near their lows of the session. Nonetheless, gold felt pressure because Powell didn’t say anything new, or anything that that hadn’t already been priced in the market.

Gold is likely to remain under pressure over the near-term until investors find value. Furthermore, the global economy is going to have to show signs of further deterioration, and the central banks are going to have to become more aggressive with their rate cuts in order to spike gold prices higher.

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