gold prices are experiencing support from expectations of a significant interest rate cut by the Federal Reserve in September. The decline in U.S. bond yields combined with a weaker U.S. dollar adds further momentum for the non-yielding metal. Nevertheless, traders remain cautious ahead of the upcoming U.S. Nonfarm Payroll (NFP) report due on Friday, which has made them hesitate in committing to aggressive long positions.
Currently, gold (XAU/USD) is struggling to maintain momentum after a bounce from a nearly two-week low of approximately $2,471. Throughout Thursday’s Asian session, prices have been fluctuating within a narrow range. The recent U.S. labor market data revealing job openings have hit a three-and-a-half-year low has increased investor concerns about economic resilience, driving a preference for safe-haven assets like gold . This comes on the back of disappointing manufacturing figures released midweek, which have further fueled risk aversion among investors.
In anticipation of the NFP report, traders are looking closely at Thursday’s U.S. economic indicators, including the ADP report on private sector employment and weekly jobless claims, for short-term trading signals. Despite prevailing uncertainties, there is a sustained belief in the likelihood of a shift in the Fed’s monetary policy easing cycle, which could bolster gold prices and encourage buying at lower levels.
Data from the Job Openings and Labor Turnover Survey (JOLTS) indicates that job openings fell to 7.673 million in July, marking the lowest level since January 2021. Additionally, previous figures were adjusted downward, underscoring a reported softening in the labor market. Insights from the Federal Reserve’s Beige Book further reveal that most regional districts experienced stagnant or declining economic activity in August, amplifying the prospect of policy adjustments by the Fed.
Recent remarks from various Federal Reserve officials suggest an urgency to modulate the current monetary policy stance to cater to evolving economic conditions, with markets pricing in a near 45% chance of a 50 basis point reduction in interest rates at the next meeting. This dovish perspective has led to a drop in yields on both the two-year and ten-year U.S. Treasury bonds, adding to the positive sentiment surrounding gold as weakness in equity markets prevails.
From a technical standpoint, gold prices exceeding the $2,500 level may encounter resistance near the $2,524 – 2,525 range before reaching the previous month’s peak around $2,531 – 2,532. Conversely, if the price retreats below $2,471, it could find support near the 50-day Simple Moving Average (SMA) around $2,435. A breach of this level may trigger further selling pressure, with additional support seen near the $2,400 level and the 100-day SMA at approximately $2,386.
