Gold Prices Recover as Safe-Haven Demand Rises
- Gold rebounds after previous day’s sell-off amid safe-haven flows.
- Hezbollah rocket attack in Israel dashes hopes of Middle East ceasefire.
- US Nonfarm Payrolls data release could impact Gold prices.
Gold (XAU/USD) is showing a 0.33% increase on Friday, bouncing back from its recent decline. The precious metal is currently trading in the $2,750 range, just below a significant resistance level on the charts.
The rise in Gold prices is attributed to the renewed demand for safe-haven assets following the Hezbollah rocket attack in northern Israel, which resulted in casualties. This event, coupled with the uncertainty surrounding the US presidential election, is driving investors towards Gold as a hedge against risk.
Potential Challenges for Gold Amid Dollar Strength
Despite the current uptick in Gold prices, there are challenges that could limit its upside potential. The US Dollar is gaining strength on Friday after a week-long decline, which could pose obstacles for Gold since it is predominantly priced in USD.
The Dollar’s resurgence is fueled by market expectations of reduced Federal Reserve (Fed) easing measures, supported by positive employment data. While job openings saw a decline, strong private payrolls and lower unemployment claims suggest a stable labor market, potentially influencing the Fed’s interest rate decisions.
The upcoming US Nonfarm Payrolls data release will be crucial in assessing the labor market’s health and its impact on future Fed policies. This data will also shed light on the Unemployment Rate and Average Hourly Earnings, providing valuable insights for investors.
If market sentiment shifts towards expecting more interest rate cuts from the Fed, Gold could receive a boost and continue its upward trend.
Technical Analysis: Gold’s Chart Patterns
Following a retreat from its recent all-time high of $2,790, Gold has retraced back into its previous trading range between $2,708 and $2,758.
Despite the pullback, Gold’s overall trend remains bullish across various time frames, indicating potential for further upside movements. The current technical outlook favors a continuation of the upward trajectory.
XAU/USD 4-hour Chart Analysis
However, the recent decline from the peak could signal a deeper pullback in the near term. The Relative Strength Index (RSI) on the 4-hour chart shows a bearish momentum shift, with RSI dropping below the 50 mark for the first time since October 10.
In case of a further decline, support levels can be found at $2,708, the lower end of the range. Conversely, a break above the $2,790 high could lead to a rally towards $2,800 and $2,850 resistance levels.
Economic Indicator: ADP Employment Change
The ADP Employment Change is a key indicator of private sector employment in the US, released by Automatic Data Processing Inc. A rise in this indicator is positive for consumer spending and economic growth, usually benefiting the US Dollar. Conversely, a lower reading could have bearish implications for the currency.
Last release: Wed Oct 30, 2024
Actual: 233K
Consensus: 115K
Previous: 143K
Source: ADP Research Institute