Gold price (XAU/USD) continues its upward trend, hovering around $2,520, near the weekly peak, as the US Dollar weakens due to the Federal Reserve’s dovish tone. Investors are showing renewed concerns about a possible economic slowdown, boosting demand for the safe-haven metal.
Traders are now waiting for the release of the US Nonfarm Payrolls (NFP) report, which could impact market expectations regarding a potential interest rate cut by the Fed in September. This decision will play a crucial role in determining the demand for the US Dollar and subsequently influence the direction of gold prices.
The market is currently pricing in a 40% chance of a 50 basis points rate cut by the Fed during its upcoming meeting in September. This speculation has been fueled by recent US employment data, indicating a weakening labor market. Reports this week revealed a significant drop in job openings and a slowdown in private-sector employment growth.
Chicago Fed President Austan Goolsbee’s comments further supported the case for easing monetary policy, keeping US Treasury bond yields low and weighing on the US Dollar. This scenario is favorable for gold prices, with a potential upside if the NFP report disappoints the market expectations.
On the technical front, a break above the $2,524-$2,525 resistance level could signal further gains for gold, potentially aiming for the previous peak around $2,531-$2,532. However, a drop below the $2,500 support level could lead to a decline towards $2,471-$2,470, followed by the 50-day Simple Moving Average at $2,440.
Overall, the current market conditions favor bullish sentiment for gold prices, with a potential for further gains if the Fed signals a more aggressive rate cut in the near future.
Technical Outlook for XAU/USD
