Choppy Session Continues for Gold – NFP Figures Awaited
During Thursday's Asian trading session, the safe-haven-metal price succeeded in stopping its early-day bearish rally and drew
Arslan Butt•Thursday, September 2, 2021•3 min read
During Thursday’s Asian trading session, the safe-haven-metal succeeded in stopping its bearish early-day rally and drew some fresh bids around the $1,815 level, as the heavy jump in Australia’s daily COVID cases joined worrisome virus numbers from New Zealand and the UK, to trigger the risk-off mood.
Thus, the downbeat market sentiment has been playing a major role in supporting the safe-haven GOLD prices. Furthermore, the cautious mood ahead of key US Nonfarm Payrolls (NFP) and chatter over the European Central Bank’s (ECB) reduction of weekly bond purchases put a further burden on the market trading mood.
This led to further gains in the safe-haven metal, gold. In simple words, the relentless spread of the Delta variant was seen as one of the key factors boosting the
gold prices. In contrast, the strength of the broad-based US dollar, backed by the risk-off market sentiment, capped the upside momentum for the yellow metal. This is due to their inverse relationship. Currently, gold is trading at 1,814.72, and consolidating in the range between 1,810.72 and 1,816.13.
Delta COVID Variant Fears Risk-Aversion
The market trading sentiment failed to stop its downward overnight performance and remained sluggish during the second half of the Asian session on Thursday, as the fast spread of COVID-19, and its Delta variant kept the market trading sentiment under pressure. The record daily jump in new cases in Australia, and worrisome virus numbers from New Zealand and the UK, raised doubts about global economic recovery.
New Zealand has crossed the 700 mark in COVID-19 cases, with the recent daily rise in figures to 49, whereas Japan is set to extend the COVID-19 state of emergency, covering Tokyo and 20 of Japan’s 47 prefectures, by another two weeks.
In Australia, COVID-19 lockdown restrictions will not be eased until 70% of the adult population gets at least one vaccination, which is expected around Sept. 23. As a result, the S&P 500 Futures has turned sluggish above 4,500, dropping by 0.03%, close to 4,520 early on Thursday.
Furthermore, the increasing tension over the Afghan-Taliban and Sino-US issues had a further bearish impact on the global equity market. However, the sluggish appearance of US stock futures tends to highlight the risk-off sentiment, which should be supportive of gold.
US Dollar & the Precious Metal, Gold
The broad-based US dollar rose on the day, as a downbeat market sentiment tends to underpin safe-haven assets. Apart from this, the uptick in the US dollar was further bolstered by the concerns that the Delta coronavirus variant could delay global economic recovery.
Conversely, the gains in the US dollar were capped by the previously released downbeat US data, which kept the bulls depressed. Thus, the ongoing bullish bias in the US dollar capped the upside for the precious metal.
Moving on, the market traders will keep their eyes on the US jobs report, including non-farm payrolls, which will be released tomorrow. This report will be key to watch for clues about the Fed’s timeline for asset tapering, and interest rate hikes, after Chairman Jerome Powell indicated labor market recovery would determine when the central bank begins asset tapering.The precious metal is consolidating in a limited trading range of 1,815 to 1,808 on Thursday.
GOLD is trading with a neutral bias at the 1,812 level. The metal, however, has entered the oversold region, and is currently undergoing a bearish decline below the 1,814 resistance level. Immediate support levels for gold are 1,807 and 1,795, to the downward side. A bearish breakthrough of the 1,795 level will push gold prices to the 1,785 level.
Daily Support and Resistance
S3 1,791.41
S2 1,802.85
S1 1,808.46
Pivot Point: 1,814.29
R1 1,819.9
R2 1,825.73
R3 1,837.17To the upside, a break of the 1,814 level might expose the metal to levels of 1,821, 1,829 and 1,841. The
RSI level on the hourly chart is still in the selling zone. As a result, until the 1,807 level, the chances of a selling bias remain high. Below the 1,814 mark, the bearish bias is intact, and vice versa. Good luck!
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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