Gold Price Forecast: XAU/USD retreats from $1,950 ahead of United States Nonfarm Payrolls

• Gold Price lacks upside momentum on the way to posting consecutive second positive week.
• Recent mixed prints of United States inflation, employment clues increase importance of US NFP for XAU/USD traders.
• Tight job market could allow Federal Reserve hawks with one more rate hike in 2023 and recall Gold sellers.

Gold Price (XAU/USD) portrays the routine consolidation ahead of the United States Nonfarm Payrolls (NFP) while easing to $1,940 amid the early hours of Friday, after reversing from the highest level in a month the previous day. Apart from the pre-data positioning, the XAU/USD traders also portray the market’s indecision about the Federal Reserve’s (Fed) next step amid a lack of clear directions from the recent US data, as well as due to less acceptance of China stimulus.

Gold Price eases on Fed, China concerns

Gold Price remains depressed after reversing from the multi-day top as markets remain dicey ahead of the key data/events, especially when the latest round of the United States data have been mixed and China fails to impress XAU/USD bulls with stimulus measures.

Following the downbeat prints of consumer confidence and employment clues, the US economic calendar flashed slightly better data on Thursday and triggered the Gold Price pullback from the monthly high. The same joins the pre-data consolidation to help the DXY pare weekly losses, the first in seven, as market players await today’s key US jobs report.

On Thursday, the US Federal Reserve’s preferred inflation gauge, namely the US Core Personal Consumption Expenditure (PCE) Price Index for August, matched market forecasts of 4.2% YoY and 0.2% MoM versus 4.1% and 0.2% respectively priors. Further, the Initial Jobless Claims dropped to 228K from 232K prior (revised) versus 235K market forecasts while the Chicago Purchasing Managers’ Index rose to 48.7 for August compared to 44.1 expected and 42.8 previous readings. Additionally, Personal Spending rose past the 0.6% expected and previous readings to 0.8% for July whereas Personal Income eased to 0.2% for the said month, from the 0.3% market forecast and prior.

It’s worth noting that Atlanta Fed President Raphael Bostic’s defense of keeping rates high also underpinned the US Dollar’s rebound the previous day and weighed on the XAU/USD.

Elsewhere, a slew of China banks cut their Yuan deposit rates after announcing a reduction in the down payment for the loan of the first and the second homes. The Dragon Nation has been on a roll for announcing measures to defend the economic recovery from COVID-19. However, the market’s doubts about the credibility of such measures make them less effective of late.

Amid these plays, the US 10-year and two-year Treasury bond yields remain depressed around the lowest level in three weeks while the US stock futures dwindle after a mixed Wall Street close. Furthermore, the US Dollar Index (DXY) struggles to defend the previous day’s rebound and prods the Gold traders.

Focus on PMI, NFP

While the mixed feelings about the US Federal Reserve (Fed) prod the Gold traders, a slew of economics stand tall to direct the Gold Price. Among them, the US employment report for August comprising the top-tier Nonfarm Payrolls (NFP), China’s Caixin Manufacturing PMI and US ISM Manufacturing PMI will gain major attention.

That said, market players seek more clues to challenge the Gold buyers as they forecast 170K figures of the Nonfarm Payrolls (NFP) versus the previously upbeat outcomes of the JOLTS Job Openings, ADP Employment Change and higher prints of the US Continuing Jobless Claims. Additionally, the three-month average of the US NFP halves to 218K versus a year earlier. As a result, the overall scenario of the US job numbers appears downbeat and can only defend the Gold sellers by posting an extremely strong outcome, failing to do so can help the XAU/USD begin September on a positive note.

Gold Price Technical Analysis

Gold Price momentum suggests the lack of buyer’s confidence via the latest retreat from the 61.8% Fibonacci retracement of July–August downside, around $1,948.

Also portraying the bull’s retreat is the pullback in the Relative Strength Index (RSI) line, placed at 14, from the overbought territory, as well as the impending bear cross on the Moving Average Convergence and Divergence (MACD) indicator.

With this, the XAU/USD is likely to revisit the 200-Simple Moving Average (SMA) support of around $1,933 before challenging the fortnight-old support line of around $1,927.

In a case where the Gold Price remains bearish past $1,927, a two-month-old horizontal area surrounding $1,900 and the previous monthly low of near $1,884 will be in the spotlight.

On the contrary, a clear upside break of the 61.8% Fibonacci retracement level of near $1,949, also known as the Golden Fibonacci Ratio, isn’t an open invitation to the XAU/USD bulls as a descending resistance line from July 20, close to $1,955, will act as an additional check for the buyers before giving them control.

To sum up, the Gold Price lacks upside momentum and may witness a pullback but the bears need validation from the US NFP.

Gold Price: Four-hour chart

Trend: Pullback expected