Gold prices surged above the $2,500 level, reaching $2,523 before experiencing profit-taking ahead of key US economic data. Traders are anticipating over 104 basis points of Federal Reserve easing, with expectations of rate cuts to support the labor market stability. The decline in US Treasury yields and a weaker US Dollar are providing further support for the upward movement in Gold prices.
During the North American session, XAU/USD is trading at $2,516, showing a gain of over 0.80%. The recent US jobs data indicated mixed readings, confirming a cooling labor market and fueling speculation for a 50-basis-point interest rate cut by the Fed. Despite the economic resilience, Gold traders are pricing in potential Fed easing, leading to the rise in Gold prices.
San Francisco Fed President Mary Daly mentioned the necessity for rate cuts to maintain a healthy labor market, further supporting the expectations of Fed easing. The fall in US Treasury yields, along with a decline in the US Dollar Index, is contributing to the positive sentiment for Gold prices.
Market Movements Ahead of US NFP Data Release
- ADP National Employment Change figures showed a lower-than-expected addition of 99K jobs by private companies in August.
- Initial Jobless Claims for the week ending August 31 came in at 227K, below projections.
- ISM Services Purchasing Managers Index (PMI) improved to 51.5, exceeding expectations.
- August NFP figures are anticipated to rise to 163K, with a potential dip in the Unemployment Rate.
Technical Analysis: Gold Price Outlook
Gold prices have surged above $2,500, indicating a bullish trend with potential upside momentum. The Relative Strength Index (RSI) is in bullish territory, suggesting further upward movement. If XAU/USD surpasses $2,531, it could target $2,550 and then $2,600. On the downside, a drop below $2,500 may lead to support at $2,470 and $2,431.
Gold FAQs
Gold is a valuable asset known for its role as a store of value and safe-haven investment during turbulent times. Central banks hold significant Gold reserves to support their currencies and enhance economic stability. The price of Gold is influenced by various factors, including geopolitical events, interest rates, and the strength of the US Dollar.