Gold Price’s Unexpected Rebound Post-NFP: What’s Next in Store for XAU/USD?
On Friday, the price of GOLD (XAU/USD) experienced a striking intraday reversal, surging over 1.3% from its base around $1,810 — a level not seen since March 8. This rebound followed the release of the U.S. monthly employment data. The subsequent Nonfarm Payrolls (NFP) data intensified the expectations for another interest rate increase by the Federal Reserve in 2023, casting a shadow over the yellow metal.
Gold’s Technical Perspective
Despite the notable ascent over the past two sessions, this could be viewed as a mere technical rally spurred by the daily chart’s oversold Relative Strength Index (RSI). The emergence of a ‘death cross’, marked by the 50-day Simple Moving Average (SMA) descending below the crucial 200-day SMA for the first time since July 2022, hints at a prevailing bearish outlook for GOLD . Consequently, any upward movement may be perceived as a transient opportunity for sellers, with the potential to subside swiftly.
In terms of technical levels, any advancement beyond the daily peak, situated in the $1,855-1,856 bracket, will likely encounter formidable resistance near the $1,865 mark. However, sustained buying could elevate the GOLD price toward the significant barrier around $1,885, succeeded closely by the psychologically significant $1,900 level — a crucial juncture for intra-day traders. Conversely, the immediate downside appears safeguarded by the $1,835-1,834 band, beneath which the XAU/USD might retract towards the $1,820 support, and potentially approach the recent multi-month nadir near the $1,810 threshold.
Scrutinizing the report’s finer details, it emerged that wage inflation remained subdued for the month in question, allaying broader inflationary fears. Such revelations could potentially coax the Federal Reserve into revisiting its stringent stance. This sentiment contributed to the U.S. Dollar’s depreciation for three consecutive days, catalyzing a robust short-covering spree around Gold and breaking its nine-day bearish trajectory.
Moreover, escalating geopolitical concerns in the Middle East provided further impetus to XAU/USD, propelling it to a weekly zenith in the Asian trading window. However, GOLD seems to grapple with any progression beyond the $1,855 mark. Market participants now await the upcoming FOMC minutes and U.S. consumer inflation data to discern future directions.
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