Gold prices (XAUUSD) remain relatively stable as investors gear up for the highly anticipated US Nonfarm Payrolls report, scheduled for release today at 13:30 GMT. This crucial data will provide insights into the strength of the US labour market, influencing the Federal Reserve’s policy decisions and ultimately impacting gold’s trajectory.
Despite facing a slight dip this week, gold retains support above the $2,009 per ounce level. Market sentiment remains bullish in the wake of recent data suggesting a gradual cooling in the US labour market. Notably, ADP’s employment change report and JOLTS data pointed towards lower-than-expected job growth and declining job openings in October. Additionally, weekly jobless claims came in lower than anticipated.
Markets are currently pricing in a 59% chance of a US rate cut by March, fuelling gold’s upward momentum. This anticipation, coupled with a weaker dollar, has been a significant driver of gold’s recent rally.
Technical Analysis:
On the 4-hour chart, gold is currently trading sideways below the ascending channel trading pattern, awaiting the NFP report. The price action is currently above the 20-SMA (green line) and 100-SMA (orange line) but trades below the 50-SMA (blue line). The 20-SMA recently broke below the upward-sloping 50-SMA, indicating a potential shift in short-term momentum. The RSI is flat, suggesting indecisiveness among traders.
A stronger-than-expected NFP report could boost the dollar and trigger a short-term pullback in gold price. Short-term traders could look for opportunities to sell towards the initial support level at $2,016.15/ounce should the bears sustain a push below the 20-SMA. A break below this level could bring the $2,005.66/ounce and $1,988.83/ounce support levels into play.
A weaker-than-expected NFP report could weaken the dollar and fuel a breakout for gold. Short-term traders could look for opportunities to buy towards the resistance level at $2,039.56/ounce should the bulls sustain a push above the 50-SMA. A break above this level could confirm the bullish momentum, likely bringing the $2,052.00/ounce and $2,068.13/ounce resistance levels within reach.
Summary:
The near-term direction of gold prices hinges on the outcome of the US Nonfarm Payrolls report. A strong report could trigger a pullback, while a weak report could pave the way for further gains.
The $2,039.56/ounce resistance level and $2,016.15/ounce support level could act as key levels in the gold’s short-term direction.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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