Gold price update experienced a notable pullback after hitting record highs recently, largely due to unexpectedly strong ADP employment data in the United States. This release eased concerns from the JOLTS Job Openings report, which had hinted at a weaker labor market. With investors digesting these economic updates, the US Dollar gained strength, impacting gold’s recent rally.
Gold Adjusts as US Employment Data Surpasses Expectations
Strong US Employment Data and Its Impact on Gold
In October, the ADP report revealed 233,000 new private payrolls, far exceeding the market’s forecast of 115,000 jobs. September’s numbers were also revised upward, increasing confidence in the US labor market’s resilience. However, these strong figures led to a reduced demand for gold, traditionally seen as a safe-haven asset.
The US JOLTS Job Openings report, released just a day prior, reflected weaker job market conditions, causing some concern about economic stability. But the ADP report reassured investors, supporting the US Dollar and leading gold prices to dip from recent highs.
US GDP and Consumption Trends
Additionally, the US Gross Domestic Product (GDP) for Q3 showed a 2.8% annualized growth rate, slightly below the anticipated 3%. Although this growth fell short of predictions, it signals a steady economic pace in line with market health. Personal consumption also remained strong, showing Americans continue to spend, which drives economic stability and inflation.
Gold Price Outlook
The recent ADP employment report, along with steady GDP and consumption, has put upward pressure on US Treasury yields. Although the Federal Reserve’s rate cut schedule remains on track, the robust economic indicators could influence future decisions. The CME Group’s Fed Watch Tool indicates a 96.3% likelihood of a 0.25% rate cut next week, with the chances of an additional December cut dropping to below 70%.
XAU/USD Technical Analysis: Signs of Potential Correction
Bullish Momentum Meets Resistance Levels
Gold has been on an upward trend driven by the current economic environment. However, technical analysis suggests that a correction could be near. The Relative Strength Index (RSI) has hit overbought territory across several time frames, with the 4-hour chart showing a bearish divergence. Such indicators often predict a pullback, as prices correct from overextended levels.
The next resistance level is identified at $2,780, with a further resistance point at $2,800. On the downside, support levels are at $2,760 and $2,730.
Potential for Correction in the Elliot Wave Cycle
Examining the daily chart, the XAU/USD pair appears to be completing the final wave in a five-wave (Elliot Wave) sequence. The 261.8% retracement of the fourth wave aligns with the $2,800 level, suggesting this point may act as a pivotal area, triggering a potential reversal.
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