Gold prices took a dip in the North American session, with the market experiencing light trading due to the U.S. Labor Day holiday. The XAU/USD price dropped to $2,499, marking a slight decline of 0.14%. This came as the U.S. Dollar remained firm, with traders closely monitoring the upcoming Nonfarm Payrolls (NFP) report. The results of this report could significantly influence the Federal Reserve’s decision on whether to adjust interest rates in September.
U.S. Economic Events to Watch This Week
This week is packed with important U.S. economic events that could shape market trends. Key releases include:
- Institute for Supply Management (ISM) Manufacturing and Services PMIs (Purchasing Managers’ Indexes)
- JOLTS job openings report
- ADP National Employment Change report
- Nonfarm Payrolls (NFP) data
These reports are expected to provide further insights into the current state of the U.S. economy.
Federal Reserve’s Stance on Inflation and Employment
In a recent speech at Jackson Hole, Federal Reserve Chairman Jerome Powell expressed concerns about inflation and employment. While he noted that inflation risks are minimal, he emphasized that employment risks are increasing.
Last week’s report on the Core Personal Consumption Expenditures Price Index (PCE) showed inflation steady at 2.5%. However, the Unemployment Rate has risen from 3.8% to 4.3% over the past four NFP reports, raising concerns about a potential slowdown in the labor market.
Recession Fears and Recent Economic Data
Fears of a U.S. recession have resurfaced despite solid economic data. Recent reports show that Initial Jobless Claims fell, Retail Sales surged, and the economy grew at a 3% rate in Q2, according to the second estimate of Gross Domestic Product (GDP).
Following these reports, gold prices fell as investors turned to the U.S. Dollar, driven by fading recession worries.
Geopolitical Risks Looming Over the Market
Despite economic developments, geopolitical risks remain. U.S. President Biden may soon present Israel and Hamas with a final proposal for a hostage release and ceasefire in Gaza, according to sources.
Technical Outlook: Gold Price Trends
From a technical perspective, gold prices are showing an upward bias. However, momentum is weakening, as indicated by the Relative Strength Index (RSI). If XAU/USD drops below $2,500, it may find support at the August 22 low of $2,470. Further declines could see the price testing the August 15 low near the $2,424-$2,431 range.
On the upside, if XAU/USD remains above $2,500, the next resistance levels to watch are $2,550 and $2,600.
For more insights into daily gold price trends, visit Daily Gold Signal for regular updates. Additionally, you can explore detailed gold price reports on their Daily Gold Update page.
