Gold price (XAU/USD) continues to trade within a narrow range between $2,630 and $2,670 after the release of mixed US labor market data. The negative impact of the strong labor report on Gold prices is balanced by rising safe-haven demand.
US Labor Market Data and Its Impact on Gold Prices
On Friday, the US Nonfarm Payrolls (NFP) report showed a sharp increase of 254K jobs in September, far exceeding the predicted 140K rise. In addition, the US Unemployment Rate fell to 4.1% from 4.2%, defying market expectations. These figures indicate the US economy remains stable, alleviating concerns of a severe downturn.
The NFP report holds great importance as it reflects the current priorities of the US Federal Reserve (Fed). Since August, Fed Chairman Jerome Powell has emphasized that stabilizing the labor market is crucial. The better-than-expected job data reduced the likelihood of the Fed introducing a significant rate cut of 50 basis points at its November meeting. The chances of such a cut have dropped from 35% to 0%, with some analysts even predicting no rate cuts at all .
This resulted in a dip in Gold price on Friday, hitting a low of $2,632. Higher interest rates make Gold less attractive, as it does not yield interest, while a stronger US Dollar adds more pressure on the precious metal, as it is primarily traded in dollars.
Safe-Haven Demand Keeps Gold Steady
Despite the labor data, Gold prices find support from safe-haven demand as global tensions rise. Escalating conflict in the Middle East has increased investor interest in Gold as a safe-haven asset. Recent news, including reports of Israeli forces bombing a mosque in southern Lebanon, has heightened uncertainty in the region .
Additionally, speculation grows that Israel might retaliate against Iran for the recent rocket attacks. Iran launched 200 missiles in response to the death of Hassan Nasrallah, the leader of Hezbollah. This geopolitical turmoil keeps Gold attractive to investors looking for safe-haven assets amid instability.
Chinese Demand and Global Interest Rates
Gold prices are also benefiting from potential demand recovery in China. The Chinese government has introduced a stimulus package aimed at boosting its economy, which could lead to increased demand for Gold. As China is the largest market for Gold, its economic health plays a significant role in determining Gold prices.
Lower global interest rates, apart from the recalibration in the US, also contribute to Gold’s appeal as a valuable asset in investment portfolios.
Technical Analysis: Gold’s Range-Bound Movement
Technically, Gold is showing a sideways pattern on the 4-hour chart, hovering between the resistance at $2,673 and support at $2,632. A key trendline is also providing additional support in the $2,440 range.
A break above the resistance at $2,673 could signal a continuation of the uptrend, pushing Gold towards the $2,700 mark. However, a move below the support at $2,632 could trigger a decline to $2,625, and a further drop might see Gold testing support at $2,600.
In the medium to long term, Gold is still in an uptrend. Once the current consolidation phase ends, it’s expected that Gold will resume its upward momentum. A breakout above the top or below the bottom of the current range will confirm the next directional move.
Conclusion
Gold price remain influenced by a mix of factors including US labor data, safe-haven demand, and Chinese economic recovery. While US job reports put pressure on Gold, geopolitical tensions and demand from China provide support. For the latest updates on Gold prices, visit Daily Gold Signal, and stay informed with their Daily Gold Update.
