Gold Price Forecast: XAU/USD seesawing around $1,755, awaiting the Nonfarm Payrolls

Update: Gold is seesawing around $1,750-$1,760 as the Asian session kicks in. The lack of a catalyst has kept the yellow metal at familiar levels. It seems that investors are awaiting the Nonfarm Payrolls report, which could confirm a bond taper announcement by the Federal Reserve November meeting.

In the meantime, US Senators are scheduled to vote on the short-term debt ceiling increase on Thursday night. US Senator Majority leader Chuck Schumer and his Republican counterpart Senator Mitch McConnell agreed to raise the statutory debt ceiling by $480 billion, which would allow the Treasury to meet its obligations by December 3rd. However, McConnell is working on getting at least nine other Republicans to vote for Schumer’s procedural motion, which needs 60 “yes” votes to advance the debt ceiling legislation to the floor.

Gold (XAU/USD) is erasing its Wednesday gains, is losing 0.31%, trading at $1,757.44 during the New York session at the time of writing. XAU/USD price action in the last week has been dull. The yellow metal keeps trading within the  $1,745 - $1,769 range, with no intentions of pushing beyond known territory.

The market sentiment is upbeat. The US debt ceiling solution, although short-term, it was a relief for investors. Additionally, Russia’s offer to ease Europe’s energy crisis sums up the upbeat tone. Despite the joyous mood of the market, investors keep worried about high inflationary pressures, as can be witnessed by the US 10-year Treasury yield, which is climbing four basis points, sitting at 1.568%, exerting downward pressure on gold.

In the meantime, the US Dollar Index, which measures the buck’s performance against a basket of six currencies, is erasing some of Wednesday’s gains, declines 0.05%, currently at 94.18.

On the macroeconomic front, the US Initial Jobless Claims increased to 326K lower than the 348K, foreseen by analysts. The abovementioned coupled with the ADP Employment Change makes two out of the three US jobs reports in the week that were positive for the greenback.

On Friday, the Bureau of Labor Statistics (BLS) will release the Nonfarm Payrolls for September. Investors expect the creation of at least 488K new jobs in the economy. A reading in line or better than estimated could increase the odds of a Federal Reserve bond taper announcement by the November meeting, opening the door for further losses for XAU/USD.

XAU/USD Price Forecast: Technical outlook

Daily chart

Gold spot price remains well below the daily moving averages (DMA’s), suggesting downside bias. 

For gold buyers to regain control, they need a daily close above the 50-day moving average (DMA) at $1,780. Once this is achieved, the following key resistance levels would be the 200-DMA at $1,798 and the 100-DMA at $1,804.

On the flip side, if XAU/USD sellers would like to resume the downtrend, they need a daily close beneath the October 5 low, at $1,747. In case of that outcome, a move towards $1,687 is on the books. Nevertheless, there would be some hurdles on the way. The first support would be the September 29 low at $1,721, followed by  $1,700.

The Relative Strength Index (RSI) is at 46, edging slightly lower, supporting the downside bias, so another leg down might lie ahead.

KEY ADDITIONAL LEVELS TO WATCH