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Gold price extends its steady intraday descent, slides back closer to $2,300 mark

  • Gold price edges lower amid an uptick in the US bond yields, though the downside seems cushioned.
  • A positive risk tone is seen as another factor undermining demand for the safe-haven precious metal.
  • Traders, however, might prefer to wait for the US NFP report on Friday before placing aggressive bets.

Gold price (XAU/USD) meets with a fresh supply on Thursday and erodes a part of the previous day's recovery gains from a nearly four-week low. The Federal Reserve (Fed) Chair Jerome Powell told reporters on Wednesday that inflation was too high and progress in bringing it down was uncertain. This suggested that the Fed will keep rates higher for longer, which pushes the US Treasury bond yields higher and  turns out to be a key factor undermining the non-yielding yellow metal.

Apart from this, a generally positive risk tone further contributes to driving flows away from the safe-haven Gold price. Meanwhile, Powell downplayed the risk of any further interest rate hikes, which fails to assist the US Dollar (USD) to attract any meaingful buyers and  languish near a two-week low touched last Friday as . This, in turn, could lend some support to the XAU/USD and help limit the downside ahead of the closely-watched US Nonfarm Payrolls (NFP) report on Friday. 

Daily Digest Market Movers: Gold price remains on defensive amid Fed rate jitters, positive risk tone

  • Federal Reserve Chair Jerome Powell warned on Wednesday that interest rates will remain high for longer as disinflation has slowed in recent months and acts as a headwind for the Gold price. 
  • The US Treasury bond yields reversed a part of the previous day's post-FOMC slide, helping revive the demand for the US Dollar and contributing to capping the upside for the non-yielding yellow metal. 
  • Meanwhile, the global risk sentiment got a boost after Powell signaled that the next move from the Fed was still likely to be an interest rate cut, which further undermines the safe-haven XAU/USD.
  • This, along with easing geopolitical tensions, suggests that the path of least resistance for the commodity is to the downside, though the lack of selling warrants caution for bearish traders. 
  • Investors might also prefer to move to the sidelines ahead of the release of the closely watched US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday.
  • In the meantime, Thursday's US economic docket – featuring Challenger Job Cuts, the usual Weekly Initial Jobless Claims, and Trade Balance data – will be looked upon for short-term trading impetus.

Technical Analysis: Gold price bears might wait for break below the 50% Fibo. level before placing fresh bets

From a technical perspective, weakness back below the $2,300 mark now seems to find decent support near the $2,280 level. The latter coincides with the 50% Fibonacci retracement level of the March-April rally, which, if broken decisively, should pave the way for deeper losses. The Gold price might then accelerate the fall towards the next relevant support near the $2,268-2,265 area en route to the $2,230-2,225 region and the $2,200 round figure.

On the flip side, the immediate hurdle is pegged near the $2,335 supply zone ahead of the weekly top, around the $2,352-2,353 area. A sustained strength beyond could lift the Gold price to the $2,371-2,372 resistance en route to the $2,400 round figure and the all-time peak, around the $2,431-2,432 area touched on April 12.

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews ​and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Read more.

Next release: Fri May 03, 2024 12:30

Frequency: Monthly

Consensus: 243K

Previous: 303K

Source: US Bureau of Labor Statistics

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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Gold extends its steady intraday descent, slides back closer to $2,300 mark