Gold price forecast (XAU/USD) is trading just above $2,500 after a brief pullback on Thursday. US yields have rebounded, pushing the US Dollar (USD) into positive territory after it had previously dropped to year-to-date lows early Wednesday.
Mixed US Employment Data
US employment figures have been mixed recently. The US Initial Jobless Claims for the week of August 14 came in at 232K, higher than the expected 230K. This was an increase from the upwardly revised 228K in the previous week. Conversely, Continuing Jobless Claims were lower than anticipated, recording 1.863 million compared to the forecast of 1.870 million. This data was provided by the US Department of Labor on Thursday.
Gold Supported by Negative US Data
Gold traders are closely watching US economic indicators for clues on future interest rate changes, which significantly impact gold prices. As interest rates decline, the cost of holding non-interest-bearing gold becomes less of a concern, which generally boosts gold price forecast.
The Federal Reserve’s (Fed) July meeting minutes, released on Wednesday, showed an increased willingness among members to cut interest rates. Some members even suggested a 0.25% cut in July, although this was not pursued. Most members indicated that a September cut would be likely if economic data remained consistent. Despite these expectations, the market had already priced in a 0.25% cut, so the Minutes had minimal impact on asset prices.
Revised US Nonfarm Payrolls Data
Recent revisions to Nonfarm Payrolls (NFP) data for the 12 months leading up to March 2024 have shown a downward adjustment of 818,000, averaging 68,000 fewer payrolls per month. This revision lowers the average monthly pace from 242,000 to 174,000. While this decline is notable, it does not yet signal a recession.
Supportive Data for Gold
The downward revision in labor market data adds to the narrative of a weakening labor market, which generally supports gold prices by adding pressure on US yields and the US Dollar.
Key Upcoming Events
The main data point to watch on Thursday is the US S&P Global preliminary Purchasing Manager Index (PMI) for August, which measures activity levels in key industry sectors. On Friday, the market will focus on Fed Chairman Jerome Powell’s speech at the central-banker conference in Jackson Hole.
Technical Analysis: Gold’s Shallow Pullback
Gold (XAU/USD) is extending a shallow pullback after reaching new all-time highs. Despite this, the short-term trend remains bullish, favoring long positions over shorts. The breakout on August 14 suggested an upside target of approximately $2,550, using the 0.618 Fibonacci ratio of the range’s height. This target reflects a minimum expectation based on technical analysis.
Gold has recently extended a shallow pullback as traders await key US PMI data. Despite this brief dip, the overall outlook for gold remains positive, influenced by recent US economic data and Federal Reserve signals.
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