- Gold attempts a bounce but lacks follow-through.
- US dollar holds the recent bounce amid risk-off mood.
- All eyes on the US NFP data for the next direction.
Gold (XAU/USD) extended the previous sell-off and finished Thursday in the red around $1931, despite the sharp declines in the Wall Street indices, which fuelled a broad risk-aversion. Meanwhile, the US dollar witnessed an up and down session, mostly holding up the recent bounce fuelled by the hopes of improved US economic recovery. The US Jobless Claims came in below the 1 million level last week while the country’s manufacturing sector activity remained solid. US policymakers showed a sense of urgency on additional fiscal stimulus to boost the economic rebound from the coronavirus impact.
Despite the overnight bounce in gold, the bulls remain unnerved ahead of the critical US Non-farm payrolls data due to be published later on Friday at 1230 GMT. The key US jobs report will offer fresh hints on the strength of the economic recovery, given the slowdown in jobs growth. The economy is expected to add 1400K jobs in August vs. +1763K prior while the jobless rate is seen ticking lower to 9.8% from July’s 10.2%. Any disappointment in the labor market report could prompt the return of the dollar bears and bode well for gold. In the meantime, the pre-NFP caution trading is likely to remain in play, with the dollar dynamics closely followed.
Gold: Hourly chart
Despite a falling trendline breakout and an uptick on the Relative Strength Index (RSI) on the hourly chart, the upside attempts remain capped by the bearish 50-hourly Simple Moving Average (HMA) at $1944.
Gold: Daily chart
Meanwhile, on the daily chart, the spot clings onto the critical triangle support at $1925in the lead up to the US payrolls release. On the flip side, the downward-facing 21-daily Simple Moving Average (DMA) at $1955 could limit the advances.
The daily RSI trades neutral at the midline, suggesting a lack of clear directional bias. Therefore, the US data will emerge as the key decider for the next direction in the bright metal.
The path of least resistance appears to the upside, in light of a bunch of healthy support levels in the major SMAs.
Gold: Additional levels to consider
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