In simple terms, during the first part of the European trading session on Friday, the price of gold (XAU/USD) showed a slight tendency to go down, but it managed to stay above its lowest level in almost a month. It stayed within a range that it has been trading in all week.
Traders are feeling hesitant and choosing to stay on the sidelines as they wait for the release of the closely watched US monthly employment report, known as the Nonfarm Payrolls (NFP) report. This report could affect the decisions of the Federal Reserve (Fed) about what to do next with interest rates, which will, in turn, decide which way gold prices will move next.
Before the release of this important data, there is a growing belief that the US central bank will keep interest rates higher for a longer time because inflation is still somewhat high. This belief is making it harder for gold prices to rise. Also, the overall positive mood in the stock markets is making it less likely for people to buy gold, which is considered a safe investment during uncertain times.
However, the Fed’s recent less aggressive stance, suggesting that it’s still thinking about lowering interest rates, might give some support to gold prices and prevent them from falling too much.
Daily Digest Market Movers: Gold Price Traders Remain Non-Committal as Attention Shifts to US NFP
- Expectations of the Federal Reserve keeping interest rates higher for a longer time, along with a positive mood in the market, are causing a decrease in demand for gold, which is usually seen as a safe choice during uncertain times.
- The Federal Reserve indicated on Wednesday that it plans to lower interest rates in the future, but it’s not rushing into it because the rate at which prices are rising (disinflation) has slowed down lately.
- This less aggressive stance from the Federal Reserve has caused the US dollar to weaken overall. This helps prevent gold prices from dropping too much.
- Traders might choose to wait for the release of the highly anticipated US monthly employment report, known as the NFP report. It’s expected to show an addition of 243,000 new jobs in April.
- The Unemployment Rate is expected to stay the same at 3.8%, while the Average Hourly Earnings may have slightly decreased to a yearly increase of 4.0% from 4.1% in March.
- The important jobs data could change how people think about what the Federal Reserve might do next with interest rates. This, in turn, will affect the value of the US dollar and give direction to gold prices.
Technical Analysis: Gold Price Range-Bound, Key Support at $2,080 for Bullish Traders
In technical terms, the price of gold has been moving within a certain range since the start of the week. This range-bound movement looks like a rectangle shape on short-term charts, indicating a period of consolidation or stability.
Additionally, certain indicators on the daily chart, which measure the strength and direction of price movements, are showing a neutral signal. This suggests that traders who are looking to make aggressive moves should be cautious. It also confirms that the short-term path for the gold price is uncertain.
If the price of gold falls below the $2,300 mark, it might find support around the $2,285-2,280 range. However, if this support level is broken decisively, it could lead to further declines in the gold price.
In that scenario, the gold price might drop towards the next significant support levels around the $2,268-2,265 area, followed by the $2,230-2,250 region, and finally reaching the $2,200 mark.
On the other hand, there are certain levels that could make it harder for the gold price to go up. Right now, the $2,326-2,328 range is acting as an immediate obstacle. If the price manages to go beyond that, it might face more resistance around the $2,335 area, and then again near the weekly high, which is around $2,346-2,347.
If the price stays strong and goes beyond these levels, it could break out of its current trading range and move higher. In that case, it could reach the $2,371-2,372 resistance level. If momentum keeps building, it could even go further up to the $2,400 mark and maybe even reach the all-time high it touched on April 12, which is around $2,431-2,432.
