In a tumultuous week for the Gold Spot Price (XAUUSD), its trajectory faced a sharp reversal, plummeting by 75 basis points on Friday. This abrupt downturn erased the gains from four consecutive days, during which the precious metal surged by 2.33%.
The catalyst for this market upheaval was an unexpectedly robust labour market report that bolstered the Greenback. January’s nonfarm payrolls revealed an astonishing addition of 353,000 jobs, nearly doubling economists’ projections and casting a shadow on the upward potential of the Gold Spot price. Wages, showcasing remarkable resilience with a 4.5% year-on-year increase, added to concerns about inflationary pressures.
As traders adjusted their outlook, diminishing the likelihood of a March rate cut from 64.0% a month ago to 17.5%, the Greenback experienced a boost, reaching an eight-week high against major currencies. The evolving anticipation among traders for U.S. PMI reports and jobless claims is crucial to determining whether the strong economic and labour market performance will validate the maintenance of higher interest rates, potentially exerting additional influence on the Gold Spot Price.
The Gold Spot Price kicked off the new week on a lower note, shedding 79 basis points. Initially trapped in a downtrend within a descending channel pattern beneath the 100-day moving average, a noteworthy shift in sentiment unfolded last week.
Breaking free from the descending channel and surging past the 100-day moving average marked a pivotal moment. This upswing commenced from the 2001.79 per ounce level, acting as a support level amid oversold RSI conditions, reaching as high as 2065.42 per ounce. However, Friday’s upbeat fundamental data triggered downside pressures, bringing the spot price towards the 61.80% Fibonacci Retracement Golden Ratio.
A potential reversal hinges on the Golden Ratio serving as an intermediate support, with the 2065.42 per ounce level potentially looming if it holds. Conversely, a breakdown below the Golden Ratio, accompanied by high downside volumes, could open the door to a retest of the 2001.79 per ounce level.
The Gold Spot Price, facing a tumultuous week, saw a sharp reversal amid a robust labour market report, which tempered rate cut expectations. Technical analysis reveals a pivotal moment as the spot price surged from 2001.79 to 2065.42, but Friday’s upbeat data introduced downside pressures, emphasizing the critical role of the 61.80% Fibonacci Retracement Golden Ratio.
Sources: U.S. Bureau of Labor Statistics, CME, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.
Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.
CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.