Gold – XAU/USD Analysis – Aug 09, 2021

US NFP Drives Gold Price Lower

On Monday, gold slipped as much as 4.4% to a more than 4-month low as vital U.S. jobs figure stoked concerns that the Federal Reserve would hike rates sooner than expected. It increased the opportunity cost of keeping non-interest-bearing bullion. The global financial markets were jolted early by a swift plunge in gold as a break of $1,750 triggered stop-loss sales to get it as low as $1,684 an ounce. It traded bearishly by 1.3% at $1,740.

Apart from this, the covid-19 updates from Australia and progress over the U.S. stimulus also favor the market trading mood. As per the recent updates, the $1.0 trillion stimuli is set for final passage from the Senate, which might be Tuesday. However, the House of Representatives will require to asset the bill before it reaches President Biden for a sign.

At the data front, China's headline Consumer Price Index (CPI) MoM rose past +0.2% market expectations and -0.4% before +0.3% in July. In contrast, the Producer Price Index (PPI) crossed the 8.8% YoY forecast and prior level to 9.0%. In addition to this, the latest U.S. jobs report, released on Friday, said nonfarm payrolls grew by a better-than-expected 943,000.

Whereas, the unemployment rate dropped to 5.4% in July. Investors keep their eyes on further data, including the core consumer price index (CPI). Thus, the prevalent risk-on mood and the firmer USD will keep the gold remain pressured.

Despite the positive catalysts, the broad-based U.S. dollar managed to extend its early-day positive moves. During the 2nd half of the Asian session, it remained well bid as vital U.S. jobs data increased hopes that the U.S. Federal Reserve would hike interest rates and begin asset tapering earlier than expected.

This was seen as one of the major factors that kept the U.S. dollar up. Meanwhile, the U.S. data raised hopes over the U.S. economic recovery, adding further optimism to the greenback. However, the upticks in the U.S. dollar held the gold prices remained under pressure as gold's price is negatively related to the price of the U.S. dollar.

Gold Intraday Technical Level

Support Resistance

1677.69 1765.34

1633.97 1809.27

1590.04 1852.99

Pivot Point: 1721.62

Gold - XAU/USD - Technical Outlook

Gold price is trading with a bullish bias after falling to 1,686 support levels. On the hourly timeframe, the metal has already completed 50% Fibonacci retracement at 1,743 level, and now this level is extending support to gold.

A bullish bias continues, and gold is going after completing 61.8% Fibonacci retracement at 1,757 levels. This level will be extending solid resistance on Monday. The MACD is coming out of the oversold zone, and the closing of candles below the 1,757 level has the potential to reverse gold's bullish correction. Therefore, the investor's focus will be staying at the 1,757 level. In case of a bullish breakout of 1,757 levels, the next resistance will prevail at 1,765 areas on Monday. Bullish bias dominates today. All the best!