Most recent article: Gold price stumbles below $2,500 as market participants eye NFP report
- Gold price trades in negative territory for the third consecutive day in Tuesday’s early European session.
- The rising US Fed rate cut bets and geopolitical risks might help limit Gold’s losses.
- Investors await the US August ISM PMI for fresh impetus.
The Gold price (XAU/USD) loses ground amid the stronger US Dollar (USD) and higher US Treasury bond yields on Tuesday. Nonetheless, the anticipation that the US Federal Reserve (Fed) will cut interest rates in September might underpin the precious metal price as lower interest rates reduce the opportunity cost of holding non-yielding gold. Additionally, the ongoing geopolitical tensions in the Middle East might boost safe-haven assets like Gold.
Looking ahead, the Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) will be published on Tuesday. The highlight for this week will be the US Nonfarm Payrolls (NFP) for August, which might determine the pace of the interest rate cut by the Fed and could influence the Gold price in the near term.
Daily Digest Market Movers: Gold price faces selling pressure amid the rebound of USD
- Protests broke out across Israel in fresh fury on Monday over the government’s failure to secure a ceasefire-for-hostages deal with Hamas, per CNN. The move is fuelled by the killing in Gaza of six hostages, whose bodies were retrieved by Israeli soldiers this weekend.
- China's Caixin Manufacturing PMI climbed to 50.4 in August from 49.8 in July, above the market consensus of 50.0.
- The US ISM Manufacturing PMI for August is expected to improve to 47.5 in August from 46.8 in July, while the Services PMI is estimated to drop to 51.1 in August versus 51.4 prior.
- The US economy is expected to see 163K job additions in August. The Unemployment Rate is expected to tick lower to 4.2%.
- The markets are now pricing in a nearly 69% possibility of 25 basis points (bps) rate cut by the Fed in September, while the chance of a 50 bps reduction is standing at 31%, according to the CME FedWatch tool.
Technical Analysis: Gold price maintains positive view in the longer term
The Gold price drifts lower on the day. According to the daily chart, the constructive outlook of the precious metal prevails as the price is well above the key 100-day Exponential Moving Average (EMA). The upward momentum is reinforced by the 14-day Relative Strength Index (RSI), which stands above the midline around 55.70, suggesting the climb is more likely to resume than to reverse.
The key resistance level for XAU/USD emerges in the $2,530-$2,540 zone, portraying the five-month-old ascending channel’s upper boundary and the all-time high. A decisive break above the mentioned level could see a rally to the $2,600 psychological level.
On the flip side, the low of August 22 at $2,470 acts as an initial support level for the yellow metal. A break below this level could drag the price further south to $2,432, the low of August 15. The next contention level to watch is $2,372, the 100-day EMA.
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 extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
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.