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Gold consolidates around $2,300 as traders remain on sidelines ahead of US NFP

  • Gold price struggles to gain any meaningful traction amid mixed fundamental cues.
  • The Fed’s less hawkish outlook drags the USD to a multi-week low and lends support.
  • Bets for a delayed Fed rate cut and a positive risk tone cap gains ahead of the US NFP.

Gold price (XAU/USD) ticks higher heading into the European session on Friday, albeit lacks bullish conviction and remains confined in a familiar range held since the beginning of the current week. Despite the Federal Reserve’s (Fed) less hawkish outlook on Wednesday, investors seem convinced that the US central bank will begin its rate-cutting cycle only in September or the fourth quarter. This, along with a generally positive risk tone, turns out to be a key factor acting as a headwind for the safe-haven precious metal. 

Meanwhile, Fed Chair Jerome Powell ruled out the possibility of any further interest rate hikes. This is seen dragging the US Dollar (USD) lower for the third straight day and lending some support to the Gold price. Moreover, traders prefer to wait for the release of the closely-watched US monthly employment details for cues about the Fed’s rate-cut path and before positioning for the next leg of a directional move for the non-yielding yellow metal. Nevertheless, the XAU/USD seems poised to post losses for the second straight week. 

Daily Digest Market Movers: Gold price traders remain on the sidelines ahead of the crucial US monthly jobs report

  • Expectations that the Federal Reserve will keep interest rates higher for longer, along with the upbeat market mood, turn out to be key factors undermining demand for the safe haven Gold price. 
  • The Fed signaled on Wednesday that the next move will be to lower the policy rate, though it was in no hurry to begin cutting borrowing costs as the disinflationary process has slowed in recent months.
  • The Fed’s less hawkish outlook led to the broad-based US Dollar weakness and helps limit the downside for the XAU/USD, warranting some caution before positioning for any meaningful downfall.
  • Traders might also prefer to wait for the release of the closely watched US monthly employment details, or the NFP report, which is expected to show that the economy added 243K new jobs in April.
  • Meanwhile, the Unemployment Rate is anticipated to remain steady at 3.8% during the reported month, while Average Hourly Earnings probably eased to the 4.0% YoY rate from 4.1% in March.
  • The crucial jobs data might influence market expectations about the Fed’s future policy decisions, which, in turn, will drive the USD and provide some meaningful impetus to the non-yielding metal.

Technical Analysis: Gold price awaits breakout through trading range before the next leg of a directional move

From a technical perspective, the range-bound price action witnessed since the beginning of the current week constitutes the formation of a rectangle on short-term charts and points to a consolidation phase. Moreover, neutral oscillators on the daily chart warrant some caution for aggressive traders and confirm the near-term trajectory for the Gold price. Hence, any further weakness below the $2,300 mark might continue to find decent support near the $2,285-2,280 region, which if broken decisively should pave the way for deeper losses. The XAU/USD might then accelerate the fall towards the next relevant support near the $2,268-2,265 area en route to the $2,230-2,25 region and the $2,200 round figure.

On the flip side, the $2,326-2,328 region now seems to act as an immediate hurdle ahead of the $2,335 supply zone and the weekly top, around the $2,346-2,347 area. A sustained strength beyond will confirm a breakout through the short-term trading range and lift the Gold price to the $2,371-2,372 resistance. The momentum could extend further towards the $2,400 mark and the all-time peak, around the $2,431-2,432 area touched on April 12.


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