The price of gold, also known as XAU/USD, went up after two days of going down during the European trading session on Monday. This happened because reports about employment in the United States were not as good as expected. This made it more likely that the US Federal Reserve (Fed) might lower interest rates in September. When interest rates go down, it makes the US Dollar weaker. Since gold is priced in US Dollars, when the dollar weakens, the price of gold tends to go up. This is because when interest rates are lower, it’s less expensive to invest in gold. So, more people might want to buy gold, which can push the price higher.
Meanwhile, worries about tensions between Iran and Israel in the Middle East are getting a bit better, and people are feeling more positive about taking risks with their investments. This might make them less interested in buying safe-haven assets like gold, which could limit how much the price of gold goes up. Gold traders will pay attention to what officials from the Federal Reserve say this week. If they sound like they’re leaning towards keeping interest rates low, it could make the price of gold go up even more.
Daily Digest Market Movers: Gold Price Rebounds Amid Downbeat US Data
- The US Nonfarm Payrolls (NFP) went up by 175,000 in April. In March, it was 315,000 (revised from 303,000). However, this is lower than what the market expected, which was 243,000.
- The Unemployment Rate increased to 3.9% in April from 3.8% before. Also, the Average Hourly Earnings dropped to 3.9% in April from 4.1% in March.
- The US ISM Services PMI fell into contraction territory, going from 51.4 in March to 49.4 in April. This was lower than what the market thought, which was 52.0.
- Fed Governor Michelle Bowman warned that inflation might stay high for longer than expected. She said she’s ready to increase rates if inflation slows down or reverses.
- Chicago Fed’s Austan Goolsbee said the recent US employment report was good. He stressed that the current monetary policy is tight.
- Expectations for the Fed to ease policies have changed. The chances of a rate cut in September have risen to nearly 90%, up from 55% before the NFP report, according to the CME FedWatch tool.
Technical Analysis: Gold Price Stays in a Downward Trend Channel for Now
The price of gold is doing well today. People still see it as a good investment, especially because it’s higher than an important average on the daily chart. However, recently, the price of gold hasn’t been able to go up much because it’s stuck in a pattern where it keeps going down. This suggests that the price might not change much in the near future. Also, a measure called the Relative Strength Index shows that investors are unsure whether to buy or sell gold right now.
In simple terms, if the price of gold keeps going up, it might face some challenges along the way. The first challenge is around $2,318. If it can break through that level decisively, it could keep going up. The next obstacle is between $2,350 and $2,355, which is where the price stopped going up on April 26 and where the top of the downward pattern is. If it can break through that, it might reach $2,400 and even an all-time high near $2,432.
But if the price starts going down instead, it might drop below $2,300. If that happens, it could go down to as low as it was on May 3, around $2,275. If it keeps dropping, the next stopping point might be around $2,228 and then $2,200.
US Dollar Price Today
Here’s a simple breakdown: today, the US Dollar’s value changed compared to other major currencies. Among them, the US Dollar was weakest against the Australian Dollar.
The heat map displays how much the value of one currency changes compared to another. The currency on the left column is the base currency, and the one on the top row is the quote currency. For instance, if you select the Euro on the left and move across to the Japanese Yen, the percentage change in the box shows how much the Euro’s value changed against the Japanese Yen.
