Gold – XAU/USD Analysis – Aug 04, 2021

Eyes on U.S. Advance NFP Data

Gold prices were closed at $1814.15 after placing a high of $1818.15 and a low of $1809.75. It reversed its course and dropped on Tuesday as traders remained on the sidelines ahead of the U.S. jobs data expected to release later this week. The traders were waiting for this report cautiously as it could influence when the Federal Reserve cuts back on its asset purchases.

Despite the declining prices of the U.S. dollar, the precious metal remained on the back foot and turned red for the trading session on Tuesday. The U.S. Dollar Index also dropped for the 2nd consecutive session and reached the 91.89 level; however, the greenback remained steady for the whole trading session as investors were not cautious about placing strong bets ahead of the key U.S. jobs market data.

The market was fixated on finding the exact timing of tapering from the Fed, which could be determined by the upcoming jobs number that is due to release on Friday. According to some analysts, the near-term outlook of the precious metal was still bullish; however, it could be changed from the two robust nonfarm payroll reports.

At 19:00 GMT, the Factory Orders from June surged to 1.5% against the forecasted 1.0% and supported the U.S. dollar and added loss in the yellow metal price. At 19:01 GMT, the IBD/TIPP Economic Optimism in August dropped to 53.6 against the projected 55.3, weighed on the U.S. dollar, and further caped loss in gold. The Wards Total Vehicle Sales also declined to 14.8M against the forecasted 15.2M and weighed on the U.S. dollar and limited the downward momentum in the yellow metal.

Meanwhile, on Tuesday, Federal Reserve Governor Michelle Bowman said that the healing of the labour market from the impact of the coronavirus pandemic would take some time. More needed to be done for the U.S. economy to push it back towards full recovery.

Bowman said in the prepared remarks that employment was still below the level where it should be despite the significant pace of the hiring. She was hopeful that the recent positive momentum would continue to build, but more work was to be done to get the economy back on a strong foot.

Another reason behind the declining prices of the yellow metal could be the latest comments from another governor of the Federal Reserve, Christopher Waller. Along with Waller, St. Louis Fed President James Bullard believes that the job market recovery was near completion. The Fed will soon start reducing its billion dollars’ worth of monthly asset purchases.

However, as for the Fed, the central bank has said that it will start tapering the asset purchases when substantial further progress is seen towards its maximum employment and flexible 2% inflation goals.

Gold Intraday Technical Level

Support Resistance

1809.89 1818.29

1805.62 1822.42

1801.49 1826.69

Pivot Point: 1814.02

Gold - XAU/USD - Technical Outlook

On Wednesday, the yellow metal gold is trading with a bullish bias at a 1,814 level. Gold price is holding over 50 EMA line, that’s supporting its prices at 1,809 level. On the 4-hour timeframe, the yellow metal has closed a bullish engulfing candle suggesting chances of a bullish trend continuation. On the higher side, the resistance stays at 1,816 and 1,821 levels. Whereas, a bullish breakout of these levels can expose gold price towards the 1,832 level.

Alternatively, the support holds around 1,809/07 level, and bearish crossover below this exposes gold price towards 1,792 level. This week will be crucial for the U.S. dollar and gold, as the U.S. economy will be releasing its NFP & Unemployment figures on Friday. Today, the focus will remain on the U.S. Advance NFP figures. All the best!