Gold Price Analysis: Holds $4,285 as 51K NFP Risk Tests the Rally’s Next Leg
Gold prices have stabilised a bit early in European trading hours after seeing a strong run over the past few weeks come to an end.
Quick overview
- Gold prices have stabilized after a strong run, with recent movements attributed to profit-taking rather than panic selling.
- The price is currently bouncing around $4285, having struggled to maintain above the key level of $4345, but the overall upward trend since late November remains intact.
- The upcoming US Nonfarm Payrolls report is crucial, as softer job numbers could confirm slowing US growth, benefiting gold prices.
- Technical indicators suggest that as long as gold stays above $4250, pullbacks are likely just profit-taking rather than a significant downturn.
Gold prices have stabilised a bit early in European trading hours after seeing a strong run over the past few weeks come to an end. The latest price action is more about people taking profits than suddenly losing interest in gold, and shows a bit more controlled price action rather than panic selling.
Gold had been struggling to hold above the key level around $4345, so when it finally failed, it pulled back a bit and is now bouncing around the $4285 mark. The good news is this little pullback hasn’t done much damage to the bigger picture that’s been driving gold prices upwards since late November, which is still pointing upwards. This implies that buyers are still interested, albeit a bit more selective than usual, rather than just packing up and going home altogether.
As we saw more evidence that US growth is starting to lose some of its momentum and real interest rates are drifting lower, gold is continuing to benefit from a bigger macro picture that’s still not making life easy for gold prices – even if the short-term positioning is getting back to normal.
US NFP in Focus as Traders Reassess Momentum
Next up, and just as important, is the US Nonfarm Payrolls report, which is forecast to be 51,000 new jobs – a sharp slowdown from the 119,000 jobs the last time round. Expect the unemployment rate to tick up a bit to 4.5%, while average hourly earnings should rise by around 0.3% – a bit more than last time but still not as good news for the greenback.
If the jobs numbers come in softer than expected, the expectation that US growth is slowing a bit is likely to be confirmed, which in turn should be good news for gold but bad news for the US dollar. On the other hand, a surprise rebound in job growth could cause a bit of short-term wobbly behaviour, but that would need to be a clear game-changer to alter the bigger trend.
Markets are always on the lookout for any data that will either confirm or contradict the view that we’re heading toward a more dovish monetary policy stance in the US.
Gold Technical Outlook: Structure Still Favors Higher Prices
The gold price is still in a rising trend channel on the 2-hour chart, and the fact that it keeps printing higher lows, with the last one around $4250-$4260, is a good sign overall. Not to mention that’s also backed up by:
- The 50-day moving average around $4280
- The 100-day moving average around $4250
- The lower boundary of the rising channel
The latest candlesticks on the chart are starting to look wobbly, but that’s more down to profit-taking than anything fundamentally wrong with the gold price. Notably, we’re not seeing any of those scary bearish reversal patterns that would get our knickers in a twist – no bearish engulfing or shooting star in sight.
The momentum indicators are also giving us a good sign – the RSI is around 44-45, which is more about digesting gains rather than getting ready for a bearish reversal. All of which is consistent with the trend continuation setups we’re seeing.
Key Trade Levels to Watch
- Buy zone: $4250-$4270
- Break below here and watch for a fall: below $4218
- Targets if it goes up: $4320 → $4345 → $4385
As long as the gold price stays above $4250, any pullbacks look more like a bit of profit-taking rather than a sell-off – and it won’t be until we see a sustained break below $4218 that the bigger picture gets called into question.
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