Gold price (XAU/USD) attracts some sellers during the Asian session on Thursday and slides closer to the $2,500 psychological mark, albeit manages to hold above the overnight swing low. The US Dollar (USD) gains some positive traction and for now, seems to have snapped a four-day losing streak, to a fresh YTD low touched on Wednesday. This, along with the underlying bullish sentiment across the global financial markets, turns out to be a key factor undermining the safe-haven precious metal.
That said, dovish Federal Reserve (Fed) expectations might cap the USD recovery and act as a tailwind for the Gold price. Data released on Wednesday showed that US job growth over the past year to March was weaker than initially estimated. Moreover, the July FOMC meeting minutes showed that several officials were leaning toward an immediate rate cut. This reaffirmed bets for an imminent start of the Fed’s policy easing cycle in September, which should benefit the non-yielding yellow metal.
Meanwhile, the lack of progress in a truce agreement between Israel and Hamas keeps the door open for a broader conflict in the Middle East and keeps a lid on the market optimism. This should further contribute to limiting the downside for the safe-haven metal, warranting some caution for bearish traders ad before confirming that the Gold price has topped out in the near term.
Daily Digest Market Movers: Gold price drifts lower amid an uptick in the US bond yields and USD
The US Dollar dived to a fresh YTD low on Wednesday in reaction to data indicating that the labor market was not as strong as estimated and assisted the Gold price in reversing an intraday dip to sub-$2,500 levels.
The preliminary annual benchmark review of employment data published by the US Bureau of Labor Statistics showed that US employers added 818,000 fewer jobs than were reported during the year through March.
Furthermore, the minutes of the July 30-31 FOMC meeting revealed that a vast majority of officials backed the case for a rate cut in September, while some policymakers were leaning toward immediate action.
The markets are now pricing in a 38% probability of a 50 basis points rate cut next month, up from 29% a day before, and about 100 bps worth of easing by the end of this year, underpinning the non-yielding metal.
Meanwhile, a truce agreement between Israel and Hamas still seems elusive, which keeps the risk of a broader Middle East conflict on the table and turns out to be another factor lending support to the XAU/USD.
Traders now look forward to the US economic docket – featuring the release of the Weekly Initial Jobless Claims and Existing Home Sales data – for short-term opportunities later during the North American session.
The market focus, however, will remain on Fed Chair Jerome Powell’s speech on Friday to see if the significantly weaker-than-expected US job growth makes a strong case for a larger interest rate cut in September.
Technical Analysis: Gold price bulls have the upper hand while above $2,480 triple top hurdle breakpoint
From a technical perspective, the range-bound price action witnessed since the beginning of this week could be categorized as a bullish consolidation phase before the next leg up. Moreover, oscillators on the daily chart are holding in positive territory and are still away from being in the overbought zone, validating the near-term constructive outlook. Hence, a move back towards retesting the all-time peak, around the $2,531-2,532 area touched on Tuesday, looks like a distinct possibility. Some follow-through buying will reaffirm be seen as a fresh trigger for bulls and pave the way for an extension of the recent well-established uptrend.
On the flip side, any meaningful pullback might continue to attract some buyers near the $2,500 round figure. This should help the downside for the Gold price near the $2,480 triple top resistance breakpoint. A convincing break below the latter might prompt some technical selling and drag the XAU/USD towards the $2,455-2,453 horizontal support en route to the $2,430 region. The corrective slide could extend further towards the 50-day Simple Moving Average (SMA), currently pegged near the $2,400 mark.
Source: fxstreet
