Gold price (XAU/USD) continues to face selling pressure for the second day in a row, staying below the key $2,500 mark during the early European session on Monday. The mixed U.S. jobs report released last Friday has reduced the chances of a larger 50-basis-point rate cut by the Federal Reserve. This led to a slight recovery in U.S. Treasury bond yields, strengthening the U.S. Dollar (USD), which has diverted investments away from the non-yielding yellow metal.
At the same time, the weak U.S. Nonfarm Payrolls (NFP) report has raised concerns about a possible economic downturn in the U.S., which might provide some support for gold prices. Additionally, ongoing tensions between Israel and Hamas have kept investors cautious, limiting risk-taking and preventing a steep drop in gold prices. Therefore, it’s wise to wait for stronger selling signals before expecting a continued decline from Friday’s pullback near the all-time high.
Market Drivers: Gold Price Impacted by U.S. Bond Yields and USD Strength
On Friday, the U.S. Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) increased by 142,000 in August, falling short of the 160,000 expectation, and down from the revised 89,000 in July. Despite this, the Unemployment Rate dropped slightly to 4.2%, while wage inflation, measured by Average Hourly Earnings, climbed to 3.8% from 3.6% in July.
Meanwhile, China’s gold holdings remained steady at 72.8 million fine troy ounces for the fourth month in a row, according to data from the People’s Bank of China (PBOC). Although markets largely ignored the latest Chinese inflation figures, consumer prices have risen for seven consecutive months, while deflation in producer prices persists.
Technical Analysis: Crucial Gold Price Levels to Monitor
From a technical perspective, gold prices have been trading within a familiar range for the past three weeks, signaling indecision among traders. This range-bound action can be seen as a bullish consolidation following a strong rally to the all-time high. Although momentum indicators on the daily chart are losing strength, they remain in positive territory.
Traders should watch the $2,470 support level closely. A break below this level could trigger selling and expose the 50-day Simple Moving Average (SMA) near the $2,443 region. Further downside could see prices test the $2,400 mark, with the 100-day SMA around $2,390 providing additional support. On the upside, strong resistance is expected near $2,520, followed by the $2,530-$2,532 zone. A break above these levels could reignite bullish momentum and push prices higher in the near term.
Conclusion
Gold prices are facing challenges due to rising U.S. bond yields and a stronger dollar, but ongoing geopolitical risks and weak economic data continue to offer support. Traders should monitor key technical levels to gauge the next move in gold prices. For more insights on gold prices, visit our Daily Gold Signal and check out our Daily Gold Update for the latest market news.
