Gold Price Forecast: XAUUSD stills down $20 from daily high post-US jobs data

Gold price remained on the defensive late during the New York session after an early US employment report showed that the Federal Reserve is “right” about pushing back on recession chatter. However, next week’s data, led by the Consumer Price Index (CPI), might signal that probably, Fed tightening is working. Meanwhile, XAUUSD is trading at $1773.33, down by almost 1%.

Before Wall Street opened, the US Bureau of Labor Statistics revealed that the July Nonfarm Payrolls report added 528,000 people to the labor market, crushing estimates of 250,000. Even June’s data was upward revised, from 325,000 to 398,000, while the Unemployment rate continued its downward path from 3.6% to 3.5%.

Regarding wages, namely Average Hourly Earnings, an essential component of the employment report and closely watched by the Fed, rose 0.5% MoM, topping 5.1% annually.

The financial market’s reaction saw the greenback jumping, as the US Dollar Index reached a daily high of around 106.930, while the US 10-year bond yield peaked at 2.869%. Additionally, money market futures expect a 75 bps rate hike for the September meeting, while the yellow metal slashed $35, hitting a daily low at $1764 a troy ounce.

Further, Fed officials crossed wires on Thursday. Loretta Mester, Cleveland’s Fed President, said a 75 bps rate hike for September is “not unreasonable.” Earlier in the week, the St. Louis Fed President James Bullard said he favors front-loading rate hikes, further cementing the case for the FOMC September meeting.

Elsewhere, tensions between the US and China, courtesy of US House Speaker Pelosi’s trip to Taiwan, weighed on the market’s mood. Once Pelosi’s visit finished,  China conducted aggressive military drills around Taiwan and announced sanctions against Nancy Pelosi and her family on Friday.

Additionally, China announced it would halt cooperation with the US in some areas, including climate change and defense while sending warships across the Taiwan Strait’s median line.

Therefore, the yellow metal price would likely remain pressured. Unless gold buyers decisively lift the price above $1800, the non-yielding metal would be vulnerable to further selling pressure.

What to watch

Next week, the US economic calendar will feature the Inflation data, namely consumer and producer indices, Initial Jobless Claims, and the University of Michigan’s Consumer Sentiment for August.

Gold (XAUUSD) Key Technical Levels