Gold price forecast (XAU/USD) has settled around $2,500 per troy ounce on Monday, following a volatile week influenced by mixed US Nonfarm Payrolls (NFP) data. The precious metal had previously tested its all-time highs but pulled back due to market reactions to employment statistics.
Initial Rise in Gold Prices Post-NFP
Gold price forecast saw a brief surge in value after the release of the NFP report on Friday. The report indicated that the US economy added fewer jobs than anticipated in August, and figures from June and July were revised downward. This softer labor market led to speculation that the Federal Reserve might consider a larger interest rate cut of 0.50% instead of the usual 0.25% in September. Lower interest rates generally benefit gold, as they reduce the opportunity cost of holding non-yielding assets.
Market Reactions and Subsequent Decline
Despite the initial rise, gold prices failed to maintain momentum as traders processed additional data from the NFP report. The Unemployment Rate dropped to 4.2% from the expected 4.3%, while wage growth increased by 0.4%, surpassing forecasts of 0.3%. These figures suggested that the labor market was not as weak as initially thought, causing market expectations of a 0.50% rate cut to decrease from 40% to 30%.
Consequently, gold retraced its gains, ending the week around $2,500 and dipping slightly to the $2,490s on Monday.
Economic Outlook and Gold Support
Despite the pullback, concerns about the US economic outlook continue to support gold prices. Federal Reserve Governor Christopher Waller indicated that interest rate cuts might be necessary to maintain economic momentum. Waller also mentioned the possibility of “front-loading cuts,” keeping the idea of a 0.50% reduction on the table.
Upcoming US Consumer Price Index (CPI) and Producer Price Index (PPI) data could further influence the Fed’s decision-making, although opinions vary on their importance compared to employment data. Analysts like Jim Reid of Deutsche Bank suggest that employment figures may play a more significant role in shaping future rate decisions.
Global Factors Influencing Gold
Globally, gold reserves remained unchanged in the People’s Bank of China (PBoC), continuing its pause on purchases since May. Meanwhile, geopolitical tensions also contribute to the uncertainty in the gold price forecast. Ongoing conflicts in the Middle East and Ukraine keep demand for gold steady, as investors seek safe-haven assets.
Technical Analysis: Range-Bound Trading
Gold is currently trading within a range between its all-time highs of $2,531 and a floor at around $2,475. A decisive breakout, either above $2,531 or below $2,475, could set the tone for gold’s next major move. The long-term trend remains bullish, with a potential upside target of $2,550 if the uptrend resumes. However, a break below $2,460 could signal a downtrend.
Conclusion
Gold prices are currently stabilizing after reacting to mixed US employment data. The focus now shifts to upcoming economic reports and the Federal Reserve’s next moves. For ongoing updates on gold market trends, you can follow our daily gold updates here.
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