Gold price has experienced a challenging period, as it grapples with persistent bearish sentiment. Despite a brief rebound, the precious metal remains under pressure due to factors such as a sell-off in oil prices, disappointing US ADP jobs data, and a slight dip in the US ISM Services PMI. In this article, we’ll explore the factors weighing on gold’s performance and examine the key bearish indicators to watch in the days ahead.

Gold Struggles Amid Bond Market Resurgence

Gold’s recent rebound is seen by some as a fleeting moment amidst the backdrop of a resilient bearish trend in the US bond market. This resurgence in bond prices is predominantly driven by a combination of factors that continue to challenge gold’s prospects.

Oil Price Sell-Off: Gold’s recovery is overshadowed by a substantial 5% decline in oil prices. This sharp drop in oil prices has temporarily alleviated inflation concerns, prompting investors to shift their focus away from safe-haven assets like gold and towards US Treasuries.

Weak ADP Jobs Data: The release of dismal US private sector jobs data by ADP on Wednesday served as a reminder of the fragile labor market. The report indicated that the US private sector added a mere 89,000 jobs in September, a significant drop from the upwardly revised 180,000 in August and well below the estimated 160,000. This underwhelming labor data has further dampened expectations of a robust economic recovery, which does not bode well for gold.

ISM Services PMI: The US ISM Services PMI’s decline from 54.5 to 53.6 in September, while meeting expectations, has raised questions about the overall health of the US economy. This uncertainty has contributed to the prevailing bearish sentiment and cast a shadow over gold’s outlook.

US Dollar and Bond Yields Still in Play

The US Dollar has faced a temporary three-day pullback against major currencies, currently trading near 106.50. However, the benchmark 10-year US Treasury bond yields are persistently hovering around the 4.70% level.

Key Bearish Indicators to Monitor

US Weekly Jobless Claims: Investors will keep a close watch on mid-tier US weekly jobless claims data for any signs of continued economic weakness.

US Nonfarm Payrolls (NFP) Report (Friday): The upcoming NFP report on Friday is likely to be another source of bearish pressure on gold. While the US economy is expected to have added 170,000 jobs in September, down from the 187,000 reported in August, the job market remains a critical factor for gold’s performance. A robust NFP report could further undermine gold’s appeal as a safe-haven asset.

In Conclusion

Gold price’s recent rebound is seen as a temporary respite amid the prevailing bearish trend in the US bond market and the broader economic landscape. While the US Dollar has shown signs of weakening, the key determinant of gold’s direction will be the forthcoming US NFP report. With ongoing economic challenges, gold continues to face an uphill battle, and traders remain cautious about its long-term prospects.