XAU/USD Current price: $2,739.91
- US Dollar demand resurged following another batch of encouraging American data.
- The US will release the October Nonfarm Payrolls report on Friday.
- XAU/USD shed roughly $50.00, and near-term readings suggest the slide could continue.
Spot Gold came under strong selling pressure after Wall Street’s opening, with XAU/USD retreating sharply from record highs and currently trading near a daily low of $2,731.45. A risk-averse mood took over financial markets on Wednesday when United States (US) data showed resilient economic growth and a healthy labour market, cooling interest rate cut expectations.
The Federal Reserve (Fed) will meet next week and announce its decision on monetary policy on Thursday, November 7. Odds for a 25 basis points (bps) interest rate cut are at 94.5%, slightly down from the 95.5% chance a week earlier. Still, market players ponder whether a Republican victory in the upcoming presidential election may force the Fed to slow the pace of loosening.
Meanwhile, the Bank of Japan (BoJ) decided to keep the interest rate target unchanged at 0.25% on Thursday and reiterated its forecast that inflation will persist near the 2% target. The announcement weighed on the Japanese Yen (JPY), providing support to the US Dollar.
Finally, the US reported that Initial Jobless Claims for the week ended October 25 improved to 216K from a revised 228K in the previous week. The country also released the September Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge. PCE inflation was up 2.1% YoY and 0.2% MoM, as expected, while the core annual reading hit 2.7%, higher than the 2.6% anticipated by market participants.
Asian and European indexes edged sharply lower, leading to a second consecutive day of sharp losses in Wall Street.
The focus now shifts to the US Nonfarm Payrolls (NFP) report, which will be released on Friday. The economy is expected to have added 113K new job positions in October, while the unemployment rate is foreseen steady at 4.1%.
XAU/USD short-term technical outlook
The XAU/USD pair trimmed most of its weekly gains, and the daily chart shows the corrective decline may continue, albeit the pair is far from bearish. In the daily chart, technical indicators retreated sharply from overbought readings and head firmly south above their midlines. At the same time, the pair remains above all its moving averages, which maintain their bullish slopes. The 20 Simple Moving Average (SMA) currently develops at around $2,696.00, providing dynamic support.
In the near term, and according to the 4-hour chart, the risk skews to the downside. XAU/USD broke below its 20 SMA, which lost its bullish strength at around $2,766.00. Nevertheless, the 100 and 200 SMAs keep heading firmly higher, well below the current level. Finally, technical indicators crossed their midlines into negative territory, maintaining their sharp downward slopes, in line with another leg lower.
Support levels: 2,731.45 2,716.90 2,701.70
Resistance levels: 2,747.75 2,760.40 2,772.50
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.