Gold Price Forecast: US Dollar firmer ahead of Nonfarm Payrolls report

XAU/USD Current price: $1,935.07

• Stocks trimmed part of their recent gains but remain in the red.
• The US economy is expected to have added 205K new jobs in July.
• XAU/USD remains stuck around $1,935 and biased lower.

XAU/USD consolidates losses on Thursday, trading in the $1,930 price zone after falling to $1,929.48 a troy ounce, its lowest in almost a month. The decline resulted from persistent US Dollar strength, as the American currency benefited from a dismal mood, which also boosted government bond yields and weighed on equities.

Market players are concerned a stubbornly tight United States (US) labor market will maintain the Federal Reserve (Fed) on the tightening path for longer than anticipated. The central bank hiked its benchmark rate to a target range of 5.25%-5.50%, the highest level over two decades.

Chairman Jerome Powell repeated afterwards that upcoming decisions would be taken meeting by meeting, although in the previous meeting, officials anticipated two 25 basis points (bps) rate hikes. That means the Fed has at least one more hike on the docket. However, market participants began lifting bets of an upcoming pause amid tepid signs of the economy turning the corner.

The latest US employment-related data, however, triggered second thoughts. A more precise picture could emerge on Friday when the US publishes the July Nonfarm Payrolls Report (NFP). The country is expected to have created 205K new job positions in the month, while the Unemployment Rate is foreseen steady at 3.6%.

XAU/USD price short-term technical outlook

The XAU/USD pair is stuck around the 61.8% Fibonacci retracement of its latest bullish run between $1,902.62 and $1,987.40 at $1,934.84, with the risk still skewed to the downside. The daily chart shows that the pair posts a lower high and a lower low for a third consecutive day while trading below the 20 and 100 Simple Moving Averages (SMAs). Technical indicators, in the meantime, have lost their bearish strength but remain directionless within negative levels.

The 4-hour chart shows that XAU/USD holds below all its moving averages, with a firmly bearish 20 SMA extending its decline below a directionless 100 SMA. Meanwhile, the Momentum indicator recovers within negative levels, while the Relative Strength Index (RSI) indicator remains near oversold territory, maintaining the risk skewed to the downside.  

Support levels: 1,922.95 1,911.80 1,898.10

Resistance levels: 1,944.95 1,954.70 1,966.90  

View Live Chart for XAU/USD