Gold Price Forecast: XAU/USD stable around $3,550 after correcting overbought conditions

XAU/USD Current price: $3,552.25

• Tepid United States employment-related data reaffirmed upcoming interest rate cuts.
• The US Nonfarm Payrolls report is expected to show a modest 75,000 new jobs in August.
• XAU/USD corrected near-term overbought conditions, aims to resume its advance in the near term.

Spot Gold retreated from the all-time high at $3,578.50 posted this week, falling towards $3,511.18 early on Thursday. Financial markets remained cautious ahead of United States (US) data releases, but somehow fears receded as reflected by Asian and European indexes, most of which closed in the green. At the same time, government bonds eased, another sign of cooling concerns.

The XAU/USD pair then swung alongside US figures. The country released a batch of discouraging employment data, which pushed the Greenback lower and the pair higher.

On the one hand, the Challenger Job Cuts showed that US-based employers announced 85,979 job cuts in August, 39% higher than the 62,075 announced in July, and the highest monthly reading since 2020. On the other hand,the ADP Employment Change report showed that the private sector added just 54,000 new job positions in the same month, much worse than the revised 106,000 from July and worse than the 65,000 anticipated. Finally, Initial Jobless Claims for the week ended August 31 rose to 237,000 from the previous 229,000 and worse than the 230,000 expected. Tepid labor market data reaffirmed the case for a Federal Reserve (Fed) interest rate cut when policymakers meet in a couple of weeks.

The USD recovered modestly following the release of the Supply Management (ISM) Services Purchasing Managers’ Index (PMI). Services output rose by more than anticipated in August, with the index printing at 52, up from 50.1 in the previous month and better than the 51 expected. Reading the sub-indexes, inflation eased while employment improved modestly, as the Prices Paid Index eased to 69.2 from 69.9, while the Employment Index ticked to 46.5 from 46.4 in July.

In the mid-American session, the positive tone of equities weighs on the USD, resulting in XAU/USD stabilizing around the $3,550 level.

Market participants will now be looking for the August Nonfarm Payrolls (NFP) report. The US is expected to have added 75,000 new positions in the month, slightly above the 73,000 added in July. The Unemployment Rate is foreseen at 4.3%, higher than the previous 4.2%.

XAU/USD short-term technical outlook

The XAU/USD pair trimmed most of its intraday losses and trades just above the $3,550 mark. The daily chart shows that technical indicators have turned marginally lower, while holding within overbought territory, suggesting gold may correct lower or consolidate before the next directional run. At the same time, the pair is trading above all its moving averages, with the 20 Simple Moving Average (SMA) gaining upward traction at around $3,398.

The near-term picture is bullish. In the 4-hour chart, XAU/USD bounced earlier in the day from a bullish 20 SMA, now providing dynamic support at around $3,522.80. The 100 and 200 SMAs slowly pick up north, far below the shorter one. Finally, technical indicators resumed their advances after correcting extreme overbought conditions, advancing with uneven strength yet still skewing the risk to the upside.

Support levels: 3,546.70 3,534.45 3,522.80

Resistance levels: 3,580.00 3,600 3,615.00