• Gold bulls have taken charge in the build-up to the NFP showdown.
  • Bulls are eyeing a deeper correction towards the golden 61.8% ratio.

The gold price surged on Thursday as the US bond yields fell and the Bank of England warned the United Kingdom's economy could be headed for a recession later this year with inflation rising as high as 13%. XAU/USD has pushed don within its weekly bullish correction to mark a high of $1,794.23. Gold for December delivery was printing above $1,800 per ounce.

Gold has been benefitting from softer US bond yields, bullish for gold since it offers no yield. The US 10-year note was last seen paying 2.699%, down 0.26% on the day. The US dollar was lower vs. most major currencies on Thursday, down some 0.5% at the time of writing as per the DXY to 105.81. The positive impact of hawkish Federal Reserve comments faded this week while investors waited for more signs on the data front. Friday's Nonfarm Payrolls and next week's inflation data will be critical. 

The Fed hiked rates by 75 basis points at its meeting in June and July. For now, the money markets are pricing in a 50 basis point hike at the Fed's September meeting, and a roughly 44% chance of another massive 75 bps increase. Today, Loretta J. Mester, president of the Federal Reserve Bank of Cleveland said on Thursday that the Fed should raise interest rates to above 4% in order to bring inflation back down to target.

"I would pencil in going a bit above four as appropriate," Mester told reporters following an event held at the Economic Club of Pittsburgh, in reference to the central bank's policy rate. "It's not unreasonable I think to maintain that as where we're getting to and then we'll see." 

  • ''We will need to raise interest rates and then hold them there for a while.
  • Then we'll bring them back down once inflation gets back closer to our 2% goal.''

Analysts at TD Securities explained that ''while Fedspeak has pushed back against the market's dovish interpretation of the FOMC, and yesterday's data surprised to the upside, seeing rates and pricing of the September hike increase, the gold market is thus far trading with a mind of its own.''

''CTA triggers for additional short covering are coming well within reach. Indeed, we estimate prices closing above $1789/oz would catalyze enough of a shift in momentum to see trend followers target a roughly flat net position,'' the analysts added. ''However, with nonfarm payrolls headlining the week tomorrow, our expectations of a stronger-than-anticipated report could quickly put a cap on the prevailing bullishness among gold bugs.''

The monthly US Nonfarm payrolls report will be closely watched on Friday after data early Thursday showed a tick up in jobless claims. 

''A strong payroll print should help drive a further rebound in the market's pricing in terminal rate pricing. This should pressure front-end rates higher, and continue to flatten the 2s10s curve. We remain short Jan 2023 Fed funds futures to position for Fed rate hikes,'' the analysts at TD Securities said. 

Gold technical analysis

As per the prior analysis, Gold Price Forecast: XAU/USD bulls are back in play, it was explained that the price was running higher in a correction of the weekly M-formation:

The grey area was a price imbalance that has now been mitigated by a 50% mean reversion:

There are prospects for further upside with the 61.8% Fibonacci meeting prior structure around $1,800.

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: China, Fedspeak probe bulls near 0.7100, Aussie inflation expectations eyed

AUD/USD: China, Fedspeak probe bulls near 0.7100, Aussie inflation expectations eyed

AUD/USD treads water around 0.7080, after rallying to the fresh two-month high, as the recent Fedspeak and headlines surrounding the China tariffs seemed to have poked the bulls. The Aussie pair traders remain cautious ahead of the monthly Consumer Inflation Expectations from Australia.


EUR/USD defends US inflation-inspired gains near 1.0300 at one-month high

EUR/USD defends US inflation-inspired gains near 1.0300 at one-month high

EUR/USD flirts with the 1.0300 threshold, after posting the biggest daily gains to refresh five-week high, as traders reassess the risk profile during early Thursday morning in Europe. The reduction in the US inflation numbers propelled hopes that Fed could ease on its rate hike trajectory.


Gold extends recovery towards $1,800 as hawkish Fed bets trim

Gold extends recovery towards $1,800 as hawkish Fed bets trim

Gold price has picked bids below $1,790.00 and is extending its recovery above the immediate hurdle of $1,792.00 amid a broader risk-on in the global market. The precious metal is expected to continue its upside run-up after a healthy correction to near $1,808.00.

Gold News

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: How to trap a hungry bear

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: How to trap a hungry bear

Crypto markets moves higher. Placing a countertrend short is still ill-advised. Higher targets remain possible for all assets. BTC tests the lower half of an ascending channel for the third time. ETH continues displaying bearish divergence but underline market strength remains. XRP in a make-or-break situation.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!