XAU/USD outlook: Bulls return to play, US jobs data eyed for near-term direction

Gold shined Thursday, advancing around 0.85% and reversing the largest part of corrective pullback from new all-time high ($2531) which found a solid ground at strong $2470 support zone, where a higher base is forming.

The yellow metals remains supported by strong physical buying by the central banks and governments, as well as safe haven buying against growing concerns about slowing economic growth and geopolitical tensions which persistently threaten escalation.

Strong signals that the US Federal Reserve will start easing its monetary policy from this month, add to gold’s brightening outlook.

The latest releases of data from the US (JOLTS / ADP reports) warned that US labor sector is losing traction and boosted expectations for more aggressive steps by Fed (bets for 0.5% rate cut against widely expected 0.25% cut, are rising) in September policy meeting.

Markets await release of US NFP report (the most significant) which will provide clearer picture about the situation in the US labor sector and determine the magnitude of Fed’s action.

Improving technical picture on daily chart supports the notion, as long tails of daily candles in past two days, point to strong bids, with return above psychological $2500 level (also daily Tenkan-sen) and retracement of more than 76.4% of $2531/$2471 pullback, contributing to signals that corrective phase is likely over.

Near-term focus shifted to the upside however, we need to see the results of NFP report of Friday, to get clearer direction signals.

Gold price may retest new record high if nonfarm payrolls disappoint expectations, but stronger than expected August numbers, on the other hand, may deflate fresh bulls.

Psychological $2500 level marks solid support, guarding lower trigger at $2470, while $2531 marks an upper pivot, violation of which to spark fresh acceleration into uncharted territory.

Res: 2523; 2531; 2545; 2554

Sup: 2500; 2494; 2485; 2470