Gold price (XAU/USD) attracts fresh buyers following the previous day’s range-bound price action and climbs to the $2,365 area, or its highest level since June 21 during the Asian session on Friday. The markets have been pricing in a greater chance that the Federal Reserve (Fed) will cut in interest rates in September and again in December in the wake of the recent softer US macro data. This, in turn, drags the US Dollar (USD) lower for the fourth straight day, to over a three-week low and turns out to be a key factor lending support to the commodity.Â
That said, the prevalent risk-on environment might keep a lid on any runaway rally for the safe-haven Gold price. Traders might also refrain from placing aggressive bets and prefer to wait for the release of the US monthly employment details. The popularly known Nonfarm Payrolls (NFP) report will influence market expectations about the Fed’s future policy decisions. This, in turn, will drive the near-term USD demand and provide a fresh directional impetus to the precious metal, which remains on track to register gains for the second successive week.Â
From a technical perspective, Wednesday’s sustained breakout through the 50-day Simple Moving Average (SMA) was seen as a fresh trigger for bullish traders. Adding to this, oscillators on the daily chart have again started gaining positive traction and suggest that the path of least resistance for the Gold price is to the upside. Some follow-through buying beyond the $2,365 area will reaffirm the constructive outlook and allow the XAU/USD to reclaim the $2,400 mark. The momentum could extend further towards challenging the all-time peak, around the $2,450 zone touched in May.
On the flip side, weakness back towards the 50-day SMA resistance breakpoint, around the $2,339-2,338 region, could be seen as a buying opportunity. This is followed by support near the $2,319-2,318 area, which if broken decisively could make the Gold price vulnerable to weaken further below the $2,300 mark and test the $2,285 horizontal zone. Failure to defend the said support levels might expose the 100-day SMA, currently near the $2,258 area, and the $2,225-2,220 support before the XAU/USD eventually drops to the $2,200 round-figure mark.
The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months’ reviews ?and the Unemployment Rate are as relevant as the headline figure. The market’s reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.
Leave a Reply