• Gold price attracts some buyers on Friday and snaps a nine-day losing streak to a multi-month low.
  • The uptick lacks any obvious catalyst and is likely to remain capped amid hawkish Fed expectations.
  • Traders now look forward to the release of the crucial US NFP report for a fresh directional impetus.

Gold price (XAU/USD) edges higher during the Asian session on Friday and for now, seems to have snapped a nine-day losing streak around the $1,813 area, or a fresh seven-month low touched the previous day. Any meaningful upward move, however, still seems elusive as traders may opt to wait on the sidelines ahead of the release of the crucial monthly employment details from the United States (US), due later on Friday.

The widely known Nonfarm Payrolls (NFP) report will influence expectations about the Federal Reserve’s (Fed) future rate-hike path and provide a fresh directional impetus to the Gold price. In the meantime, the prospects for further policy tightening by the Fed remain supportive of elevated US bond yields, which helps the US Dollar (USD) to stall a two-day corrective slide from the YTD peak and should cap gains for the precious metal.

Market participants seem convinced that the Fed will stick to its hawkish stance in the wake of resilient US macro data, which remain consistent with expectations for solid growth in the third quarter. Furthermore, stronger US jobs data would mean more pressure on wages and on inflation, which might force the Fed to keep rates higher for longer. This, in turn, should boost the USD and weigh on the US Dollar-denominated Gold price.

Daily Digest Market Movers: Gold price edges higher after declining for nine straight sessions

  • Gold price gains some positive traction on Friday and moves away from a seven-month low touched the previous day amid some repositioning trade ahead of the crucial US NFP report.
  • The US economy is expected to have added 170K jobs in September, less than the 187K in the previous month, while the jobless rate is anticipated to tick down to 3.7% from 3.8% in August.
  • The benchmark 10-year US Treasury bond yield holds steady near a 16-year peak on the back of hawkish Fed expectations and underpins the US Dollar, which should cap upside for XAU/USD.
  • Fed officials on Thursday showed little concern about the recent surge in the US bond yields and said that it could actually help the central bank in its fight against persistently high inflation.
  • Fed officials have been warning that rates are likely to stay elevated, though the markets are pricing in less than a 40% chance of another rate hike before the end of this year.
  • Thursday’s US macro data showed that Weekly Jobless Claims rose moderately to 207K last week, though it remained around recent lows and pointed to still-tight labour market conditions.
  • The continued tightness in the labour market could exert upward pressure on inflation and necessitate additional interest rate hikes by the US central bank.

Technical Analysis: Gold price could extend the consolidation phase before the next leg down

The occurrence of a death cross, with the 50-day Simple Moving Average (SMA) falling below the key 200-day SMA for the first time since July 2022, signals the potential for further weakness in the Gold price. That said, the Relative Strength Index (RSI) on the daily chart still points to near-term oversold conditions and makes it prudent to wait for a further near-term consolidation or a modest bounce before the next leg down. Nevertheless, the technical setup remains tilted firmly in favour of bearish traders and suggests that the path of least resistance for the XAU/USD is to the downside.

From current levels, any subsequent move up might continue to confront stiff resistance near the $1,830-$1,832 supply zone, above which a bout of a short-covering rally could lift the Gold price to the $1,850 hurdle. The recovery momentum could extend further, though it is more likely to remain capped near the $1,858-1,860 strong barrier. On the flip side, the $1,815-1,813 area, or a multi-month low, now seems to have emerged as an immediate strong support. This is followed by the $1,800 round-figure mark, which if broken decisively will expose the next relevant support near the $1,770-1,760 region.

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.

USD   0.04% 0.06% 0.02% -0.08% 0.15% 0.06% 0.06%
EUR -0.04%   0.02% -0.02% -0.13% 0.12% 0.03% 0.03%
GBP -0.06% -0.02%   -0.04% -0.13% 0.08% 0.01% 0.01%
CAD -0.01% 0.02% 0.04%   -0.09% 0.13% 0.04% 0.05%
AUD 0.07% 0.11% 0.11% 0.09%   0.22% 0.15% 0.14%
JPY -0.15% -0.10% -0.08% -0.15% -0.24%   -0.08% -0.09%
NZD -0.06% -0.02% -0.01% -0.04% -0.15% 0.08%   0.00%
CHF -0.07% -0.03% -0.01% -0.05% -0.15% 0.09% 0.00%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Economic Indicator

United States Nonfarm Payrolls

The Nonfarm Payrolls released by the US Bureau of Labor Statistics presents the number of new jobs created during the previous month in all non-agricultural businesses. The monthly changes in payrolls can be extremely volatile due to their high relation with economic policy decisions made by the Federal Reserve. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility in the Forex board. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish), although previous months’ reviews ​and the unemployment rate are as relevant as the headline figure, and therefore market’s reaction depends on how the market assets them all.

Read more.

Next release: 10/06/2023 12:30:00 GMT

Frequency: Monthly

Source: US Bureau of Labor Statistics

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

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