Gold Price Stalls at $2,295 Amid Surging US Job Growth Impact

The price of gold (XAU/USD) has entered a bearish consolidation phase, currently oscillating near a low not seen in over a month, below the $2,300 level. This downturn follows the release of unexpectedly strong US employment data, which has significantly impacted market sentiment and gold prices.

Impact of US Jobs Data on Gold Prices

The Nonfarm Payrolls (NFP) report for May indicated that the US economy added significantly more jobs than expected, tallying 272,000 new positions compared to the 185,000 anticipated.

NFP Report 📊

The U.S. labor market demonstrated resilience in May, with nonfarm payrolls climbing by 272,000, significantly surpassing the expected 182,000 and the revised April figure of 165,000

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This robust job growth has led investors to adjust their expectations for a Federal Reserve interest rate cut in September, keeping US Treasury bond yields high and the US Dollar strong.

On Friday, these factors combined to push the dollar to a nearly one-month high, creating a challenging environment for gold, which does not yield interest.

Global Central Bank Moves and Upcoming Economic Events

Adding to the downward pressure on gold, reports emerged that the People’s Bank of China (PBoC) halted its gold purchases in May, ending an 18-month buying streak. This pause has raised concerns about demand for the precious metal, especially from one of the world’s largest markets for gold.

Despite these bearish factors, gold found some support from a cautious market sentiment, which has traditionally benefitted safe-haven assets like gold.

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Investors are also watching closely for upcoming key US economic data and central bank events. The release of the latest US consumer inflation figures and the outcome of the Federal Open Market Committee (FOMC) meeting on Wednesday are particularly significant.

These events could provide further insights into the economic landscape and influence the Federal Reserve’s monetary policy decisions.

Market Outlook and Investor Sentiment

The market’s response to the US jobs report has adjusted the likelihood of a September rate cut to about 50%, a significant decrease from 70% just a day before the report. Now, market participants are largely anticipating only one rate cut this year, likely in November or December.

Friday’s market response to a stronger than expected Jobs Report was a microcosm of the year: US large caps beat small caps and non-US stocks. We expect this trend will continue.

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This week’s inflation data and the FOMC decision will be critical in shaping market expectations and could either confirm or adjust the current bearish trend in gold prices.

Investors remain cautious, preferring to wait on the sidelines until more data is available. The next few days will be crucial for gold traders as they seek signals on the Federal Reserve’s rate cut timeline and assess the resilience of the US economy.

These factors will be pivotal in determining the future directional movements of gold prices.

Gold Price Forecast: Technical Outlook

Gold is trading modestly higher today at $2,295.18, marking a slight increase of 0.03%. The precious metal finds itself oscillating near a crucial pivot point, currently set at $2,296.58, as observed on the 4-hour chart.

In terms of resistance, gold faces its first major barrier at $2,315.81. Should bullish momentum continue, the next levels to watch are $2,331.77 and $2,360.83. On the flip side, support is initially found at $2,272.02.

Further declines might test subsequent support levels at $2,258.52 and $2,244.61, which could be critical in preventing deeper losses.

The Relative Strength Index (RSI) is at 32, suggesting that gold may be approaching oversold conditions, which could potentially fuel a rebound if buyers step in near the pivot point.

Additionally, the 50-day Exponential Moving Average (EMA) stands at $2,343.25, which currently acts as a resistance level, further underscoring the bearish trend in the short term.