GOLD Price Analysis – Sep 06, 2024
Daily Price Outlook
Gold price (XAU/USD) extended its rebound to around $2,510 but remains below recent highs, as traders adopt a cautious stance ahead of the crucial US Nonfarm Payrolls (NFP) report, set to be released at 12:30 GMT.
The metal's upward movement is largely driven by weaker-than-expected US private payrolls data released on Thursday, which showed slower job growth despite a marginal fall in unemployment claims.
This has pressured the US Dollar (USD) as markets anticipate the NFP to play a critical role in shaping future US interest rate expectations. Additionally, concerns about a stagnant jobs market further enhance gold's safe-haven appeal.
Gold Price Boosted by Weaker US Employment Data and Rate Cut Speculations
On the US front, the broad-based US dollar weakened as Gold recovered following the release of disappointing ADP Employment Change data. The report revealed that the private sector added only 99,000 new jobs in August, falling short of the previous month’s 111,000 (revised down from 122,000) and economists’ 145,000 estimate.
Although US Initial Jobless Claims showed a drop to 227,000, from the revised 232,000 and an expected 230,000, it didn’t fully counteract the negative sentiment from the ADP data, painting a picture of a slowing labor market.
This data, along with recent weak JOLTS jobs figures, has increased speculation that the Federal Reserve may cut interest rates more significantly at their September 18 meeting. Lower interest rates make holding Gold more attractive by reducing the opportunity cost of the non-yielding asset.
Friday’s Nonfarm Payrolls (NFP) report will be crucial in determining whether the Fed opts for a 0.50% cut or a standard 0.25% cut. Currently, the market sees a 40% chance of a 0.50% cut, and weaker NFP data could increase this probability, potentially boosting Gold’s price.
Therefore, the weaker ADP data and ongoing labor market concerns heighten expectations for a significant Federal Reserve rate cut, boosting Gold's appeal. If Friday's NFP data confirms a slowdown, it could increase the likelihood of a 0.50% cut, driving Gold prices higher.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,519.03, up 0.09% in the 4-hour timeframe, as traders navigate mixed signals in the broader market.
The price is testing key technical levels, with the immediate resistance at $2,540.41 and the pivot point holding firm at $2,527.08. Should gold break above this level, bullish momentum could push it towards the next resistance targets of $2,553.16.
On the downside, immediate support sits at $2,499.42, with deeper supports at $2,482.48 and $2,472.08. A drop below $2,499.42 may signal increased selling pressure, potentially driving the price toward these lower support levels.
The 50-day Exponential Moving Average (EMA) of $2,506.28 is currently acting as a solid floor, reinforcing the bullish outlook as long as prices remain above it.
The Relative Strength Index (RSI) is at 59, signaling neutral to slightly bullish momentum. However, a break above 60 on the RSI would further confirm stronger upward movement, while a dip below 50 could shift the outlook to bearish.
Given the technical setup, traders might consider buying above $2,500, with a take-profit target of $2,520 and a stop-loss at $2,490. The technical picture suggests that gold’s next move will likely depend on its ability to break above the $2,527 pivot point or hold support near $2,499.42.
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