Friday’s worse-than-expected US NFP report triggered a wave of fear that led to panic selling across all markets at the US open today. The risk of a global recession looms, potentially impacting demand for gold jewelry, but benefiting the monetary aspect of gold as central banks cut rates. Despite the turmoil, gold has maintained its bullish momentum since early June, showing resilience in the face of uncertainty.
Gold bulls were optimistic as the yellow metal approached record highs near $2480 on Friday, anticipating a breakout to $2500+. However, the bleak US jobs report dashed these hopes, causing widespread panic selling. As the day progressed, markets stabilized and gold recovered from its intraday low, indicating a potential rebound.
Market analyst Rhona O’Connell from StoneX explained, “Gold’s selloff today is a common reaction to sharp declines in equity markets, as investors sell gold as a hedge against risk to raise liquidity. However, historical trends suggest that gold often rebounds after such sell-offs, indicating potential for higher prices in the future.”
Gold Technical Analysis – XAU/USD Daily Chart
As shown in the chart above, gold bounced back after testing its 50-day EMA near $2375, maintaining its bullish momentum. Traders are now eyeing a recovery to the $2450 level and a potential breakout above the record high at $2485, paving the way for further gains towards $2600+. On the flip side, a close below today’s low could shift the outlook to neutral, leading to consolidation between $2300 and $2400.
In summary, while the current market volatility poses challenges for gold, the fundamental bullish thesis remains intact. Gold’s resilience in the face of economic uncertainty and its potential for higher prices make it a compelling asset for investors seeking stability in turbulent times.