Gold prices crept up on Friday ahead of critical US labor data. Still, the metal is on track for its third weekly loss, speculating that the Federal Reserve will maintain its aggressive rate-hike policy. As of 0055 GMT, spot gold was up 0.2% to $1,699.40 per ounce, although it was down 2% for the week. Gold futures in the United States were up 0.1% at $1,710.50.

The dollar index was slightly lower than a 20-year high reached the previous day, but it remained on course for a third weekly gain. The gold market is trying a dead cat bounce from six-week lows of $1,689 as investors reposition themselves ahead of the critical US Nonfarm Payrolls report.

GOLD traders should avoid making directional bets because the US payroll data will almost certainly influence the Fed’s rate hike price for this month. Markets are betting on a 75 basis point rate rise in September ahead of the US employment data. However, as aggressive Fed rate hikes raise expectations, the dollar continues in a win-win situation. China’s new COVID lockup in Chengdu-led risk-aversion will continue to benefit dollar bulls.

As a result, the precious metal XAU/USD is vulnerable to additional depreciation if the recovery effort fails. However, US Treasury rates are reaching multi-year highs, limiting bullion returns. According to Stephen Innes, managing partner of SPI Asset Management, weaker-than-expected statistics might provide a reprieve from gold selling. “The market is still gambling on a higher-for-longer US interest rate story.” The United States nonfarm payrolls report is scheduled at 1230 GMT and is expected to indicate 300,000 jobs were gained in August.

According to data released on Thursday, the number of Americans submitting new claims for unemployment benefits plunged to a two-month low last week. At the same time, layoffs declined in August, implying that the Fed will need to continue aggressively hiking rates. While factory activity in the United States increased gradually last month, it fell in China, the eurozone, and the United Kingdom.

Major central banks are anticipated to maintain aggressive monetary policy tightening to reign in sky-high inflation, but this is also fueling concerns about an economic downturn. Even though gold is viewed as a hedge against inflation and economic uncertainty, higher interest rates raise the opportunity cost of owning the metal.

Gold Technical Outlook

The gold price’s slide halted at 1690.00, allowing positive trades to be generated by stochastic positivity, leading us to acknowledge that we will see further bullish bias today, with a primary target of 1726.60.

As a result, we anticipate a continuation of the positive bias in the next sessions, keeping in mind that failure to exceed 1702.00 would halt the indicated climb and press on the price to restart the main bearish trend.

Today’s trading range is likely between 1685.00 support and 1725.00 resistance.

Today’s projected trend: bullish