gold continues its upward trajectory, reaching new record highs and testing levels above $3,650. The precious metal has gained over 1.5% this week, buoyed by a broadly weak US dollar and a cautious investor sentiment. The dollar index remains near its lowest levels in seven weeks against major currencies, reflecting diminished confidence in the greenback amid expectations of monetary easing.
Market concerns are centered around the prospects of substantial Federal Reserve rate cuts later this year. Recent labor market data has pointed to signs of weakening economic growth, with nonfarm payrolls missing expectations significantly. The Bureau of Labor Statistics reported an increase of just 22,000 jobs in the previous month, well below the forecasted 75,000, and the unemployment rate rose to 4.3%, its highest since late 2021. These figures have intensified speculation about the Federal Reserve adopting a more dovish stance, potentially delivering multiple rate cuts in the coming months.
Investor focus now shifts to the upcoming US Nonfarm Payrolls Benchmark Revision, expected to revise employment data downward for the recent period. Economists predict a possible reduction of up to 800,000 jobs, which could suggest that the labor market is weaker than initially reported. Such a downward adjustment may prompt a short-term decline in gold prices, especially if the revision leads to a “sell the fact” reaction, given the market’s overbought conditions on the daily chart.
Technical signals reinforce the cautious outlook. The 14-day Relative Strength Index indicates an overbought condition with readings above 80, hinting at a potential short-term pullback. Should gold experience a decline, initial support levels are seen near $3,600, with a critical psychological level at $3,550 providing additional downside protection. Conversely, if buying pressure resumes, resistance could emerge around $3,700 and $3,750, as traders evaluate the broader economic implications of incoming data and policy signals.
