- Gold price attracts some buyers on Friday and snaps a nine-day losing streak to a multi-month low.
- The uptick lacks any follow-through and remains limited amid bets for more Fed rate hikes in 2023.
- Traders now look forward to the release of the crucial US NFP report for a fresh directional impetus.
Gold price (XAU/USD) attracts some buying on Friday and for now, seems to have snapped a nine-day losing streak around the $1,813 region, or a fresh seven-month low touched the previous day. The intraday uptick, however, lacks follow-through as traders opt to wait on the sidelines ahead of the release of the crucial monthly employment details from the United States (US), due later on Friday.
The widely known Nonfarm Payrolls (NFP) report will influence expectations about the Federal Reserve’s (Fed) future rate-hike path and provide a fresh directional impetus to the Gold price. In the meantime, the prospects for further policy tightening by the Fed remain supportive of elevated US bond yields, which helps the US Dollar (USD) to stall a two-day corrective slide from the YTD peak and should cap gains for the precious metal.
Market participants seem convinced that the Fed will stick to its hawkish stance in the wake of resilient US macro data, which remain consistent with expectations for solid growth in the third quarter. Furthermore, stronger US jobs data would mean more pressure on wages and inflation, which might force the Fed to keep rates higher for longer. This, in turn, should boost the USD and weigh on the US Dollar-denominated Gold price.
Daily Digest Market Movers: Gold price takes a breather after falling for nine straight days
- Gold price gains some positive traction on Friday and moves away from a seven-month low touched the previous day amid some repositioning trade ahead of the crucial US NFP report.
- The US economy is expected to have added 170K jobs in September, less than the 187K in the previous month, while the jobless rate is anticipated to tick down to 3.7% from 3.8% in August.
- The benchmark 10-year US Treasury bond yield holds steady near a 16-year peak on the back of hawkish Fed expectations and underpins the US Dollar, which is seen capping upside for XAU/USD.
- Fed officials on Thursday showed little concern about the recent surge in the US bond yields and said that it could actually help the central bank in its fight against persistently high inflation.
- Fed officials have been warning that rates are likely to stay elevated, though the markets are pricing in less than a 40% chance of another rate hike before the end of this year.
- Thursday’s US macro data showed that Weekly Jobless Claims rose moderately to 207K last week, though it remained around recent lows and pointed to still-tight labour market conditions.
- The continued tightness in the labour market could exert upward pressure on inflation and necessitate additional interest rate hikes by the US central bank, favouring the USD bulls.
Technical Analysis: Gold price consolidates its recent heavy losses to a seven-month low
The occurrence of a death cross, with the 50-day Simple Moving Average (SMA) falling below the key 200-day SMA for the first time since July 2022, signals the potential for further weakness in the Gold price. That said, the Relative Strength Index (RSI) on the daily chart still points to near-term oversold conditions and makes it prudent to wait for a further near-term consolidation or a modest bounce before the next leg down. Nevertheless, the technical setup remains tilted firmly in favour of bearish traders and suggests that the path of least resistance for the XAU/USD is to the downside.
From current levels, any subsequent move up might continue to confront stiff resistance near the $1,830-$1,832 supply zone, above which a bout of a short-covering rally could lift the Gold price to the $1,850 hurdle. The recovery momentum could extend further, though it is more likely to remain capped near the $1,858-1,860 strong barrier. On the flip side, the $1,815-1,813 area, or a multi-month low, now seems to have emerged as an immediate strong support. This is followed by the $1,800 round-figure mark, which if broken decisively will expose the next relevant support near the $1,770-1,760 region.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.04% | 0.06% | 0.02% | -0.08% | 0.15% | 0.06% | 0.06% | |
| EUR | -0.04% | 0.02% | -0.02% | -0.13% | 0.12% | 0.03% | 0.03% | |
| GBP | -0.06% | -0.02% | -0.04% | -0.13% | 0.08% | 0.01% | 0.01% | |
| CAD | -0.01% | 0.02% | 0.04% | -0.09% | 0.13% | 0.04% | 0.05% | |
| AUD | 0.07% | 0.11% | 0.11% | 0.09% | 0.22% | 0.15% | 0.14% | |
| JPY | -0.15% | -0.10% | -0.08% | -0.15% | -0.24% | -0.08% | -0.09% | |
| NZD | -0.06% | -0.02% | -0.01% | -0.04% | -0.15% | 0.08% | 0.00% | |
| CHF | -0.07% | -0.03% | -0.01% | -0.05% | -0.15% | 0.09% | 0.00% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Source: https://www.fxstreet.com/news/gold-price-stalls-its-declining-trend-ahead-of-the-crucial-us-nonfarm-payrolls-data-202310060400