Steady Ahead Of US Employment Report

Gold is 0.3% higher in today’s Asia-Pac session, after closing steady at $2446.26 on Thursday.

• Surprisingly, bullion looked past weaker-than-expected ISM manufacturing and jobless claims data, which sent US bond yields and US equities sharply lower.
• Initial jobless claims were notably higher coming in at 249k vs 236k, while continuing claims were 1877k vs 1855k. ISM Mfg was 46.8 vs 48.58, the lowest since November 23, while the largest miss was employment which came in at 43.4 vs 49.2 est. This was the lowest level since the pandemic.
• The markets read the reports as more evidence of a slumping economy, with the downdraft in the ISM employment component as a harbinger of an "unwelcome" decline in employment that Chair Powell said would be a condition for a rate cut.
• Lower rates are typically positive for gold, which doesn’t pay interest.
• US OIS pricing softened a touch with the market fully pricing in one 25bps cut for September and a cumulative 82bps of cuts into year-end.
• The market’s focus now turns to the US Employment Report for July, which is to be released later today.
• According to MNI’s technicals team, this week’s gains are constructive. A continuation higher would expose $2483.7, the Jul 17 high. On the downside, initial support is $2,401.3, the 20-day EMA.