US Jobs Data Shock; Gold Soars $32 to Record High

On Tuesday (October 29th), due to the uncertainty of conflicts in the Middle East and expectations of a Federal Reserve interest rate cut, the investment appeal of gold was enhanced, causing spot gold to surge by more than $32 and set a new historical high.

Spot gold closed on Tuesday with a significant increase of $32.30, up 1.2%, at $1,774.35 per ounce. The gold price touched a record high of $1,774.80 per ounce during the session.

FXStreet analyst Christian Borjon Valencia noted that under the influence of the pullback in U.S. Treasury yields, the gold price in the North American market on Tuesday hit a historical high of $1,774 per ounce. After the release of mixed U.S. economic data on Tuesday, investors seem to believe that the Federal Reserve will lower borrowing costs at the November meeting.

The market currently estimates a 98% chance of a 25 basis point rate cut by the Federal Reserve in November.

Since gold does not generate interest, it can thrive in a low-interest-rate environment and is considered a means of hedging against market volatility. So far this year, the gold price has soared by more than 34%.

Valencia added that against the backdrop of escalating conflicts in the Middle East, demand for safe-haven assets remains strong.

Peter Grant, Vice President and Senior Metal Strategist at Zaner Metals, stated that with ongoing geopolitical tensions and political uncertainties, gold is supported by safe-haven bets.

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Mixed U.S. Economic Data, Key Employment Data "Bombshell"

In terms of data on Tuesday, the U.S. Job Openings and Labor Turnover Survey (JOLTS) job openings number for September fell from 7.86 million in the previous month to 7.44 million, reaching the lowest level in three and a half years, far below the expected 7.99 million.

This data indicates a decline in demand for labor, with businesses waiting for the economy to accelerate. This is the fewest number of job openings since January 2021.The JOLTS job openings report is one of the labor force indicators that former Treasury Secretary Yellen, when serving as the Chair of the Federal Reserve, valued the most. This indicator is also a labor market data point that the Federal Reserve pays close attention to.

The U.S. Conference Board's Consumer Confidence Index for October recorded 108.7, a new high since January 2024, with expectations at 99.5, and the previous value revised from 98.7 to 99.2.

Traders are also awaiting a busy economic schedule, which will include a series of employment data: ADP employment changes, initial jobless claims, and non-farm employment numbers. These will further gauge the Federal Reserve's policy stance and the interest rate decision it will make at its meeting on November 7th.

Other data to be released include the Gross Domestic Product (GDP) for the third quarter of 2024, the Institute for Supply Management (ISM) Manufacturing Purchasing Managers' Index (PMI), and the Federal Reserve's preferred inflation indicator—the Personal Consumption Expenditures (PCE) Price Index.

The U.S. Bureau of Economic Analysis will release the third-quarter GDP data on Wednesday. It is estimated that the U.S. economy grew by 3% in the third quarter. The Atlanta Fed's GDP Now model indicates that the U.S. economy grew by 3.3% in the third quarter of 2024.

In terms of geopolitics, the Gaza Health Ministry stated that Israeli attacks on northern Gaza resulted in at least 93 Palestinians dead or missing.

Valencia noted that with ongoing conflicts in the Middle East, gold continues to be supported by safe-haven funds.

A Reuters survey showed that gold prices are expected to continue their upward trend into 2025, as the U.S. interest rate backdrop and geopolitical tensions continue to enhance gold's investment appeal.

How to trade gold?

Valencia said that gold prices rebounded on Tuesday, and if buyers push the price above $2,775 per ounce, the price will test $2,800 per ounce. Once the latter is breached, the gold price target will be the psychological thresholds of $2,850 per ounce and $2,900 per ounce.On the other hand, Valencia added that if sellers step in and push the gold price below $2,750 per ounce, the next support level would be $2,700 per ounce. Following that, the support level is the high point on September 26th at $2,685 per ounce, and then the 50-day simple moving average (SMA) at $2,603 per ounce.

Valencia pointed out that the momentum indicates that the Relative Strength Index (RSI) remains bullish and has broken through the previous peak, which implies that buyers are gaining momentum.