Market update: PBoC halts gold purchases

PBoC holds off gold purchases

Gold prices are under slight pressure as China's central bank – the People’s Bank of China (PBoC) – holds off on purchases for the second straight month. This absence of a significant buyer – the PBoC has been a constant buyer of gold over the last 18 months – leaves the precious metal susceptible to profit-taking after last week’s NFP-inspired rally. The precious metal traded at a six-week high last Friday at just under USD 2,400/oz. but has drifted lower today after the weekend news.

US interest rate cut expectations

US interest rate cut expectations nudged higher at the end of last week after the latest US Jobs Report suggested a hiring slowdown. While the headline NFP number was slightly higher than expected, the prior month’s revisions, and the increase in the jobless rate to 4.1%, more than outweighed the headline beat. There is now a 74% probability of a 25 bp cut at the September 18th FOMC meeting with a further quarter-point cut priced in by the end of the year.

Fed interest rate projections

Retail trader sentiment

Retail trader data shows 51.73% of traders are net-long with the ratio of traders long to short at 1.07 to 1. The number of traders net-long is 7.45% higher than yesterday and 14.76% lower than last week, while the number of traders net-short is 2.83% higher than yesterday and 17.61% higher than last week.

Technical analysis

Gold remains rangebound and is currently sitting in the middle of a multi-month range. The 20- and 50-day simple moving averages remain supportive, while a clean break above USD 2,287/oz. would leave range resistance at USD 2,450/oz. under threat. A break below the two moving averages would leave USD 2,320/oz. as the next level of interest.

Gold daily chart

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