Sharply Higher Ahead Of US Payrolls, Regional Bank Concerns Helped Rally

Gold is little changed in the Asia-Pac session, after closing 0.8% higher at $2054.99 on Thursday.

• Bullion was supported by a slide in the USD and lower US Treasury yields, which came following friendly economic data.
• Initial Jobless Claims unexpectedly rose by 9k last week to 224k, while Q4 Non-Farm Productivity growth exceeded expectations. It showed a robust annualised increase of 3.2%. Consequently, unit labour costs, at an annualised rate of 0.5%, turned out to be weaker than anticipated. This marks the second consecutive quarter of subdued performance in unit labour costs.
• Focus now turns to Non-Farm Payrolls data later today.
• US regional bank concerns with respect to commercial property losses also helped the precious metal by spurring traders to price in a more rapid pace of Federal Reserve interest-rate cuts. Lower borrowing costs are positive for the non-yielding metal.
• TD Securities noted that macro traders in gold are historically underinvested for a cutting cycle. “In fact, our estimates of discretionary trader positioning points to notable short acquisitions over the last weeks, which could suggest that macro traders have been caught in a bear trap following the slew of hot data releases. This sets the stage for substantial outperformance in the yellow metal on the horizon, and our simulations of future price action suggest that imminent CTA buying activity could potentially kick off the start of a pain trade for macro traders.”