GOLD Price Analysis – Sep 09, 2024
Daily Price Outlook
After briefly retesting its all-time highs on Friday, Gold (XAU/USD) pulled back to $2,490 per troy ounce on Monday.
The initial rise came after the US Nonfarm Payrolls (NFP) report showed that fewer jobs were added in August than expected, signaling a potential slowdown in the labor market.
This fueled speculation that the Federal Reserve (Fed) might implement a larger 0.50% rate cut in September. Lower interest rates typically benefit Gold, as they reduce the opportunity cost of holding non-yielding assets like the precious metal.
However, the gains were short-lived. Further analysis of the NFP report revealed a drop in the Unemployment Rate to 4.2%, along with a stronger-than-expected rise in wage growth at 0.4%, which softened expectations of aggressive rate cuts.
As a result, the likelihood of a 0.50% rate cut dropped from 40% to 30%, causing Gold to fall back below $2,500.
Gold’s Outlook Shaped by Mixed Economic Signals
Despite the recent pullback, Gold remains supported by ongoing concerns about the US economy.
Fed Governor Christopher Waller expressed support for starting rate cuts soon to maintain economic momentum, citing signs of a "softening" but not "deteriorating" labor market. Waller also kept the door open for a non-standard 0.50% reduction.
This week, the focus shifts to upcoming US Consumer Price Index (CPI) and Producer Price Index (PPI) data, which could further influence expectations for the Fed’s next move.
While inflation data typically plays a crucial role in rate decisions, analysts like Jim Reid of Deutsche Bank suggest that employment data may currently carry more weight.
Geopolitical Risks Add to Gold’s Appeal
On the geopolitical front, tensions in the Middle East and Ukraine continue to provide support for Gold as a safe-haven asset.
The deteriorating ceasefire prospects between Israel and Hamas and escalating violence, along with Russia’s advance in Ukraine, increase uncertainty.
Countries like Poland have been increasing their Gold reserves, reflecting a growing demand for the precious metal amid geopolitical instability.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,490.23, up 0.06%, but remains in a bearish territory. The pivot point for the day stands at $2,500.43, with the metal currently unable to break through this resistance.
The immediate resistance level lies at $2,511.12, followed by more substantial hurdles at $2,527.08 and $2,540.41. The 50-day Exponential Moving Average (EMA) also aligns closely with the pivot point, reinforcing the overhead resistance at $2,500.53.
On the downside, immediate support is observed at $2,482.48, with further support levels at $2,472.08 and $2,462.04, suggesting that any breach of these could push the metal into a steeper decline.
Technical indicators signal a bearish outlook, with the Relative Strength Index (RSI) at 38, indicating that selling pressure still dominates.
As the RSI remains below 50, it suggests that the market sentiment is tilted toward more downside risk in the near term. If Gold fails to break above the $2,500 pivot point, bears could push the price down to test the $2,482.48 support level.
The strategy for traders remains cautious, with a sell order advised below the $2,500 mark. Traders eyeing the downside could aim for a take-profit level at $2,477, with a stop-loss set around $2,510 to limit potential losses if the price rebounds.
The next few trading sessions will be pivotal as Gold’s direction depends heavily on whether it can break through the $2,500 resistance or slide below key support levels.
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