Gold Price (XAU/USD) Exhibits Volatile Moves as Investors Await US Employment Data

Posted Thursday, June 1, 2023 by
Arslan Butt • 2 min read

GOLD price (XAU/USD) is showing fluctuating movements within the range of $1,962 to $1,967 during the Asian session. The precious metal has entered a sideways phase as investors eagerly anticipate the release of United States employment data. This data is expected to provide crucial insights into the Federal Reserve’s (Fed) interest rate policy for June.

The S&P500 futures are displaying erratic movements in the Asian market following selling pressure from investors on Wednesday. The volatility associated with US labor market data has weighed on risk-sensitive assets, as positive figures would leave the Fed with little choice but to continue raising interest rates.

The US Dollar Index (DXY) is striving to extend its recovery above 104.30. Concerns of another interest rate hike by Fed Chair Jerome Powell are anticipated to boost the appeal of the USD Index. Investors are eagerly awaiting the US Nonfarm Payrolls (NFP) data to gain a clearer picture of the labor market’s health.

According to the preliminary report, the labor market added 190,000 payrolls in May, lower than the 253,000 additions in April. The Unemployment Rate has increased to 3.5% compared to the previous release of 3.4%. The Annual Average Hourly Earnings remain steady at 4.4%, while monthly labor costs are expected to expand at a slower pace of 0.3%, down from the 0.5% recorded in April. These factors might alleviate concerns of labor cost-push inflation in the future.

Gold Technical Outlook:

GOLD prices have started to exhibit bearish rebound after encountering key resistance at 1977.25. This is accompanied by negative signals from the stochastic indicator, supporting the possibility of a resumption of the corrective bearish trend. The next major targets for the downside movement are 1945.20, followed by 1913.15 levels.

If the minor support level at 1961.00 is breached, it would facilitate the expected decline. However, breaking above 1977.25 would invalidate the negative scenario and prompt a price recovery, potentially leading to an attempt to regain the main bullish trend.

The expected trading range for today is between the support level of 1945.00 and the resistance level of 1977.00.

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