- Gold price continues to draw support from bets for a 50 bps Fed rate cut in September.
- Falling US bond yields and softer USD also act as a tailwind for the non-yielding metal.
- Bulls, however, seem reluctant and await the release of the US NFP report on Friday.
Gold price (XAU/USD) extends its sideways consolidative price move through the Asian session on Thursday and remains below the $2,500 psychological mark. The commodity, however, manages to hold above a nearly two-week low touched on Wednesday amid rising bets for a larger interest rate cut by the Federal Reserve (Fed) in September, bolstered by a US labor market report showing that job openings fell to a three-and-a-half-year low in July. Apart from this, the cautious market mood, amid concerns about the health of the US economy, turns out to be another factor acting as a tailwind for the safe-haven precious metal.
Despite the aforementioned supportive fundamental backdrop, traders seem reluctant to place aggressive bullish bets around the Gold price ahead of the crucial US monthly employment details – popularly known as the Nonfarm Payrolls (NFP) report on Friday. Heading into the key data risk, Thursday's US economic docket – featuring the release of the ADP report on private sector employment, the usual Weekly Jobless Claims and the ISM Services PMI – will be looked upon for short-term trading opportunities. Nevertheless, the bias seems tilted in favor of bullish traders and supports prospects for the emergence of some dip-buying at lower levels.
Daily Digest Market Movers: Gold price traders opt to wait for the release of the US NFP report on Friday
- The Job Openings and Labor Turnover Survey (JOLTS) published by the US Bureau of Labor Statistics showed that job openings fell to 7.673 million in July, or the lowest level since January 2021.
- Adding to this, the reading for June was revised lower to show there were 7.910 million unfilled positions against the previously reported 8.184 million, further pointing to a softening labor market.
- Furthermore, the Federal Reserve’s Beige Book revealed that nine out of 12 regional districts reported flat or declining economic activity in August, up from five that reported weak conditions in mid-July.
- Meanwhile, Atlanta Federal Reserve President Raphael Bostic said that price pressures are diminishing quickly and that the US central bank must not maintain a restrictive policy stance for too long.
- Separately, San Francisco Fed President Mary Daly said that the central bank needs to cut rates to keep the labor market healthy, but it is now down to incoming data to determine by how much.
- According to the CME Group's FedWatch Tool, markets are pricing in around a 45% chance that the Fed will lower borrowing costs by 50 basis points at the upcoming policy meeting on September 17-18.
- The dovish outlook drags the yield on the rate-sensitive two-year US government bond to its lowest level since May 2023 and the benchmark 10-year US Treasury yield to its lowest since July 2023.
- This keeps the US Dollar bulls on the defensive and turns out to be a key factor acting as a tailwind for the non-yielding Gold price amid a generally softer tone surrounding the global equity markets.
- Traders now look to Thursday's release of the US ADP report on private-sector employment and Weekly Initial Jobless Claims for some impetus ahead of the Nonfarm Payrolls report on Friday.
Technical Outlook: Gold price could resume its uptrend once the $2,524-2,525 supply zone is cleared decisively
From a technical perspective, any subsequent strength beyond the $2,500 psychological mark is likely to confront some resistance near the $2,524-2,525 supply zone ahead of the all-time peak, around the $2,531-2,532 area touched last month. Some follow-through buying will be seen as a fresh trigger for bulls and set the stage for the resumption of the recent well-established uptrend amid positive oscillators on the daily chart.
On the flip side, the $2,471-2,470 horizontal zone seems to have emerged as an immediate strong support, below which the Gold price could slide to the 50-day Simple Moving Average (SMA), currently pegged near the $2,435 region. A convincing break below the latter might prompt some technical selling and expose the 100-day SMA, around the $2,386 area, with some intermediate support near the $2,400 round figure.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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 holds near 1.1100 after mixed US data](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/dollar-and-euro-bills-58059534_XtraSmall.jpg)
EUR/USD holds near 1.1100 after mixed US data
EUR/USD struggles to hold above 1.1100 in the American session on Thursday. The US Dollar holds its ground following the mixed macroeconomic data releases as investors refrain from taking large positions ahead of Friday's jobs report.
![GBP/USD stays above 1.3150 as markets assess US data](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/new-style-twenty-pound-notes-3079195_XtraSmall.jpg)
GBP/USD stays above 1.3150 as markets assess US data
GBP/USD continues to trade in positive territory above 1.3150 on Thursday. After weakening against its rivals on weak ADP employment data, the US Dollar finds a foothold on upbeat Jobless Claims and ISM Services PMI data, limiting the pair's upside.
![Gold extends recovery toward $2,520 area](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/stack-of-golden-bars-in-the-bank-vault-60756080_XtraSmall.jpg)
Gold extends recovery toward $2,520 area
Gold extends its rebound and trades near $2,520 in the second half of the day on Thursday. The benchmark 10-year US Treasury bond yield stays in the red below 3.8% after mixed data releases from the US, supporting XAU/USD.
![Crypto Today: Bitcoin, Ethereum attempt recovery from recent dip, XRP loses key support and slips to $0.54](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/Bitcoin_Book_XtraSmall.jpg)
Crypto Today: Bitcoin, Ethereum attempt recovery from recent dip, XRP loses key support and slips to $0.54
Bitcoin and Ethereum attempt recovery from the decline earlier this week, BTC is back above $57,000 and Ether hovers around $2,400. XRP loses key support and slips to $0.54 on Thursday. Former CEO of defunct exchange Mt.Gox prepares to launch EllipX in Europe.
![ADP Employment Change Preview: US private sector expected to add 145K new jobs in August](https://editorial.fxstreet.com/images/Macroeconomics/EconomicIndicator/Employment/employment-51256484_XtraSmall.jpg)
ADP Employment Change Preview: US private sector expected to add 145K new jobs in August
ADP Employment Change is forecast to arrive at 145,000 in August. Labor market conditions could influence the Fed’s policy outlook. The US Dollar stays resilient against its rivals after posting large losses in August.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.