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Interviewed by Al Arabiya Head of Research and Development at Noor Capital and member of the US Association of Technical Analysts, Mohammed Hashad shed light on the most important developments and market movements, especially the American stock market, which is achieving remarkable gains.
Host: For more on global markets, we’re joined from Dubai by Mohammed Hashad, Chief Market Strategist at Noor Capital. Welcome, Mohammed. Let’s start with the data we’re expecting from the US. There’s a significant set of data, including key labor market indicators and non-farm payrolls, which will undoubtedly play a pivotal role in the Federal Reserve’s decision later this month. How do you expect these numbers to turn out?
Mohammed Hashad: Indeed, the US market is anticipating what is often referred to as “full-fat data” this week. We’re awaiting job openings, labor turnover rates, and crucial employment figures, including unemployment rates and, most importantly, average wages. The markets have already started to price in the possibility that the Fed will adjust its monetary policy at the next meeting, likely by twenty-five basis points. There’s even some speculation, based on the Fed’s tools, that the cut could be fifty basis points. However, the markets may remain directionless until the employment data is released. I expect the employment data to be positive, which would support the Fed’s stance to begin cutting interest rates and ending its tightening cycle, especially as inflationary pressures have started to ease. Inflation is approaching the official target of 2%, and I believe the focus has shifted from inflation to growth. Therefore, I think the jobs data will bolster Jerome Powell’s position to reduce interest rates.
Host: How much of a cut do you expect at this meeting? A quarter or half a percent?
Mohammed Hashad: From my perspective, I anticipate a 25 basis point cut. But the key issue isn’t just the size of the cut—whether 25 or 50 points—but the pace at which these rate cuts are implemented. This will significantly impact the markets. I believe the Fed will approach this cautiously, reducing rates gradually based on the data it monitors. Given the current data, I think 25 points is sufficient.
Host: The markets are pricing in a total of 100 basis points by the end of the year. Do you believe we will see a full one-percent cut by then?
Mohammed Hashad: Yes. Particularly since the US economy has shown strong growth, exceeding expectations in the second quarter of this year. Jerome Powell now sees less need to maintain high interest rates to avoid harming the labor market. There’s a real possibility that rates will be reduced by one percent over the coming months.
Host: We’re also looking ahead to the Bank of Canada’s meeting tomorrow, where there’s an expectation of a quarter-percent rate cut. However, a small portion of the market—around 22%—anticipates a half-percent cut. Do you expect a quarter-percent cut from the Bank of Canada?
Mohammed Hashad: Yes, I believe a 25 basis point or quarter-percent cut is appropriate given the current economic data in Canada. I don’t think the Bank of Canada will move by fifty points before seeing how the Fed acts.
Host: Let’s talk a bit about gold. Currently, prices are above $2,500 per ounce, but we’re somewhat distant from the record high of $2,531 reached in August. With the Federal Reserve moving towards rate cuts, where do you see gold prices heading in the near term? Will gold gain some support?
Mohammed Hashad: Over the past three sessions, gold prices have faced selling pressure and have indeed retreated from their peak of $2,530 per ounce. This might be a reaction to the US dollar index rebounding, bolstered by rising US Treasury bond yields, particularly the ten-year yield, which climbed to 1.31%. This has put significant pressure on gold prices. I expect that gold will lack clear direction this week until the US jobs data is released, as that will determine both the size and pace of rate cuts. Additionally, the relative calm in geopolitical tensions in the Middle East may have contributed to the decline from last month’s peak. However, in general, I believe that with continued rate cuts by central banks, we may witness new highs for gold, as it remains the best store of value during periods of rate reductions.
Host: Where do you see gold at the end of the year?
Mohammed Hashad: I think that once the recent high of $2,531 is broken, we could see prices reaching $2,580 or even up to $3,000 per ounce.
