Gold Price Forecast: XAU/USD clings to gains above $1,810, lacks follow-through ahead of NFP


Update: Gold regained positive traction on the last day of the week and reversed the overnight losses, though lacked any strong follow-through buying. Investors now seem convinced that the Fed will wait for a longer period before rolling back its massive pandemic-era stimulus. Moreover, Wednesday's disappointing ADP report raised doubts about the US labour market recovery and further dampened prospects for an early Fed liftoff. This, in turn, kept the US dollar bulls on the defensive near one-month lows and was seen as a key factor that provided a modest lift to the dollar-denominated commodity.

That said, the prevalent risk-on environment continued acting as a headwind for traditional safe-haven assets and kept a lid on any meaningful rally for gold, at least for the time being. Traders also seemed reluctant to place any aggressive bets ahead of Friday's release of the closely-watched US monthly jobs data. The popularly known NFP report could provide fresh clues about the likely timing of the Fed's tapering plan and provide a fresh directional impetus to the non-yielding gold. In the meantime, the XAU/USD is likely to prolong its range-bound price action witnessed since the beginning of this week.

Hence, it will be prudent to wait for some strong follow-through buying before positioning for any further appreciating move, back towards the $1,832-34 supply zone. A sustained move beyond will mark a fresh bullish breakout and set the stage for an extension of the recent strong bounce from the $1,686 region, or multi-month lows touched on August 9. Gold might then accelerate the momentum towards the $1,852 region en-route the next major hurdle near the $1,869-70 area.

Previous update: Gold (XAU/USD) prices step back from an intraday high surrounding $1,815, up 0.12% on a day near $1,812 heading into Friday’s European session. In doing so, the yellow metal rises the most in three days inside a bullish chart pattern ahead of the key US Nonfarm Payrolls (NFP).

Gold prices cheer upbeat market sentiment and weaker US dollar to stay firmer. That said, the US Dollar Index (DXY) refreshed monthly low in Asia before recently paring the losses to 92.20.

Firmer risk appetite could be linked to the softer catalysts for the US jobs report for August marked a soft NFP, versus 750K expected and 943K prior, pushing away the Fed tapering concerns. Also positive for the mood could be the receding hospitalization in the US and mixed numbers in Asia–Pacific, not to forget the vaccine optimism surrounding the UK.

The Initial Jobless Claims and Continuing Claims eased from the market consensus for the week ended on August 27 Thursday and the four-week average of Initial Jobless Claims also declined from 366.75K to 355K. Previously, the ADP Employment Change and the employment component of the US ISM Manufacturing PMI both signaled a contraction in the US jobs and marked the need for further easy money policies.

Additionally, talks of Japanese PM Yoshihide Suga’s resignation and the UK’s battle for the likely stringent virus-led lockdown in the future also portray the current risk appetite and underpin the EUR/USD bulls.

That said, S&P 500 Futures rise 0.20% intraday, tracking the Wall Street benchmarks that closed mildly positive on Thursday whereas the US 10-year Treasury yields drop 0.4 basis points (bps) to 1.29% by the press time.

Moving on, gold will cheer a likely weakness in the US jobs report for August as it cuts the odds of the Fed’s tapering. However, the key employment details are famous for delivering surprises and hence keep the traders on their toes. Also important will be the US ISM Services PMI for August, 61.5 forecast compared to 64.1 prior.

Read: Nonfarm Payrolls August Preview: Sine qua non for the taper

Technical analysis

Despite snapping a three-week uptrend, gold portrays a bullish flag on the four-hour chart. This joins steady RSI and sustained trading beyond the 18-day-old support line to back the buyers.

However, a clear upside break of $1,819 becomes necessary for a bullish pattern to trigger the theoretical upside move towards May’s top near $1,916.

During the rise, highs marked during July and August, surrounding $1,832-35, will be important and so do the $1,900 threshold.

On the other hand, a downside break of the immediate support line from August 10, near $1,809, will drag the quote to the flag’s lower line near $1,804.

In a case where gold prices remain weak below $1,804, the $1,800 round figure may offer an intermediate halt during the fall to 200-SMA $1,793.

Overall, gold remains in the upward trajectory but bulls need a strong trigger and hence highlight today’s US NFP.

Gold: Four-hour chart

Trend: Further upside expected

Additional important levels

Overview
Today last price 1811.72
Today Daily Change 1.89
Today Daily Change % 0.10%
Today daily open 1809.83
 
Trends
Daily SMA20 1784.27
Daily SMA50 1794.95
Daily SMA100 1814.37
Daily SMA200 1809.81
 
Levels
Previous Daily High 1817.21
Previous Daily Low 1805.04
Previous Weekly High 1819.22
Previous Weekly Low 1776.56
Previous Monthly High 1831.81
Previous Monthly Low 1687.78
Daily Fibonacci 38.2% 1809.69
Daily Fibonacci 61.8% 1812.56
Daily Pivot Point S1 1804.18
Daily Pivot Point S2 1798.52
Daily Pivot Point S3 1792.01
Daily Pivot Point R1 1816.35
Daily Pivot Point R2 1822.86
Daily Pivot Point R3 1828.52

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

AUD/USD bulls keep the reins above 0.6800 ahead of RBA’s Lowe, US NFP

AUD/USD bulls keep the reins above 0.6800 ahead of RBA’s Lowe, US NFP

AUD/USD portrays the typical pre-data/event anxiety as it seesaws near 0.6800 during the early Asian session on Friday, after refreshing the 11-week high the previous day. The Aussie pair rose during the last three consecutive days amid broad US Dollar weakness.

AUDUSD News

EUR/USD grinds near five-month high past 1.0500, ECB’s Lagarde, US NFP in focus

EUR/USD grinds near five-month high past 1.0500, ECB’s Lagarde, US NFP in focus

EUR/USD cheered the broad-based US Dollar weakness to march towards the highest levels since late June, before recently taking rounds to 1.0520-30 during the generally quiet early Asian session. Mixed data from Eurozone, United States, failed to tame the bulls.

EUR/USD News

Gold approaches $1,807 hurdle ahead of United States Nonfarm Payrolls

Gold approaches $1,807 hurdle ahead of United States Nonfarm Payrolls

Gold price (XAU/USD) refreshed a four-month high above $1,800 before taking rounds to $1,805-07 during early Friday morning in Asia. In doing so, the yellow metal portrays the market’s cautious mood ahead of the key catalysts.

Gold News

Coinbase Wallet disables NFT transfers as Apple forces 30% fees compliance

Coinbase Wallet disables NFT transfers as Apple forces 30% fees compliance

Coinbase Wallet took a dig at the biggest tech company in the world, Apple, after it was forced to deactivate some of its features. The wallet service of the world's second-biggest cryptocurrency exchange in the world could not follow certain policies by Apple.

Read more

Nonfarm Payrolls Preview: Dollar selling opportunity? Low expectations to trigger temporary bounce Premium

Nonfarm Payrolls Preview: Dollar selling opportunity? Low expectations to trigger temporary bounce

A flashback to 2019 just before 2022 ends? The last Nonfarm Payrolls release is set to show a pre-pandemic level of job gains, around 200,000. Or maybe lower. However, expect another positive surprise – triggering a temporary Dollar bounce. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures