Rising US employment expected to pressure gold prices – Daily Market Brief, August 8, 2022

Last week, gold prices rocketed off support, reaching USD 1794.23, up 6.7% from yearly lows. This happened after China fired missiles over Taiwan during drills. House Speaker, Nancy Pelosi, was the highest-ranking American to visit the island in 25 years, which led to a harsh response from Beijing. 

On the other hand, US firms added more jobs than expected, proving a rock-solid labour market and indicating the Fed will continue to raise interest rates sharply to combat inflation. Investors expect the Fed to keep raising borrowing prices to control demand and inflation.

Strong hiring trends may encourage the Fed to front-load rate hikes, but they should ease fears of an economic cliff edge. In the short term, this may help stabilize risk appetite, reducing demand for gold as a haven. 

Key Factors for Today

– Asian stocks were mixed on positive Chinese trade data.
– European futures indicate a higher open.
– After Friday’s advances, DXY remains contained, and AUD beats the G10

Coming Up 

– EuroZone Sentix
– Earnings from BioNTech, Barrick Gold, Porsche SE & Siemens Energy.

China says it will continue military exercises today near Taiwan.

China was meant to wrap up the military exercises and activities yesterday. However, based on the military’s announcement that drills will also take place on Monday around Taiwan, it appears that won’t be the case. There have been some disputed claims about what China is preparing, including rumors that in recent days, the military attempted to practice an invasion of Taiwan.

RBNZ raises inflation expectations

The RBNZ’s comments indicate that the bank is at ease with inflation expectations. Although the 1- and 2-year yields are both climbing over the target range of 2 to 3 per cent, the RBNZ claims that longer-term expectations are roughly in line with the band’s midpoint.

North Korea willing to send 100,000 troops to Ukraine

According to Business Insider, North Korea has stated its willingness to send 100,000 “volunteer” soldiers to assist Vladimir Putin in continuing the ongoing war in Ukraine. This occurs after unverified reports in the Western media that Russia has suffered unexpectedly high numbers of casualties to the point of “desperation,” forcing it to supposedly provide fresh recruits with rushed and poor training.

Iran and the US are close to reviving their nuclear agreement.

The senior EU negotiator at the talks said Sunday night that Iran and the U.S. are close to reviving the 2015 nuclear agreement, but it’s unclear if Tehran will accept it. According to EU negotiator Enrique Mora, an agreement’s language might be finalized in the next few hours. Iran must decide whether to maintain its position that the nuclear agreement can only be restored after a UN nuclear agency investigation is concluded. 

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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