GOLD Price Analysis – Oct 07, 2024
Daily Price Outlook
Gold prices (XAU/USD) remain under pressure, trading within the range of 2,639 to 2,653 as a result of several key factors. Investors are increasingly reducing their expectations for aggressive policy easing by the Federal Reserve, particularly following the release of strong US jobs data on Friday. This shift in sentiment has bolstered the US Dollar, pushing it to a seven-week high and contributing to the ongoing decline in gold prices.
Conversely, easing concerns about a US economic slowdown, combined with optimism regarding China's stimulus measures, is boosting market sentiment, which is putting additional pressure on gold prices. Whereas, the escalating geopolitical tensions in the Middle East offer some support for gold, as investors typically flock to this safe-haven asset during periods of uncertainty.
Strong US Economic Data Strengthens Dollar and Pressures Gold Prices
On the US front, the broad-based US dollar has gained strength, hitting a seven-week high around 102.380 as investors lower their expectations for aggressive rate cuts from the Federal Reserve. This shift followed the release of robust US jobs data on Friday, which revealed that the economy added 254,000 jobs in September, significantly exceeding expectations.
Furthermore, the unemployment rate unexpectedly dipped to 4.1%, indicating a resilient labor market. The data also showed that an additional 72,000 jobs were created in July and August than previously reported, suggesting that the economy is in better shape than anticipated.
As a result, market expectations for the Federal Reserve to implement aggressive policy easing have diminished. According to the CME Group's FedWatch Tool, there is now a 95% chance that the Fed will only lower rates by 25 basis points at its November meeting. This outlook has put additional pressure on gold prices (XAU/USD).
Market Sentiment and Geopolitical Tensions Impact Gold Prices
On the flip side, easing concerns about a US economic slowdown and positive sentiment surrounding China's stimulus measures are boosting the market mood, which is not good for safe-haven assets like gold. Although, rising geopolitical tensions in the Middle East, particularly following Israel's recent airstrikes in Gaza and Lebanon, could bolster gold's status as a safe-haven asset.
Therefore, the easing concerns about a US economic slowdown and positive sentiment from China's stimulus measures weaken gold prices. However, rising geopolitical tensions in the Middle East could increase demand for gold as a safe-haven asset, supporting its price.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) continues to trade under pressure, declining 0.22% to hover around 2,643.68. The yellow metal’s current price action reflects indecisiveness as it remains within a tight consolidation range between 2,638.72 and 2,658.54. This neutral stance is a direct result of stronger-than-expected U.S. payroll data, which has boosted the dollar and U.S. Treasury yields, consequently putting downward pressure on gold.
Technical Overview: On the 4-hour chart, gold is trading slightly below its 50-day Exponential Moving Average (EMA) of 2,653.37, indicating a lack of bullish momentum. The Relative Strength Index (RSI) sits at 43, suggesting moderate bearish sentiment but with room for a potential rebound.
If gold prices break below immediate support at 2,638.72, it could pave the way for further declines towards 2,632.38 and possibly 2,624.84. Conversely, holding above 2,643.68 could encourage a retest of the 2,652.40 pivot point, followed by resistance levels at 2,658.54 and 2,666.35.
Conclusion: Given the bearish undertone, selling below 2,649 seems prudent, with a take profit target set at 2,635 and a stop loss at 2,656. Traders should monitor price action around the key support level of 2,638.72, as a sustained move below this level could trigger a more substantial sell-off.
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