Gold recovers back above $2,500 after US job’s data

• Gold recovers after the release of under par US job’s data stokes fresh concerns about a hard landing. 
• The probability the Fed will cut interest rates by half a percent at its September meeting rises to 45%. 
• Technically, Gold forms two bullish Hammer candlesticks in a row, suggesting a chance of a recovery.     

Gold (XAU/USD) trades back above $2,500 on Thursday after rebounding from the $2,471 previous day’s lows, following the release of lower-than-expected job openings data in July from the US, which stoked fresh hard-landing fears. 

Gold price finds its feet after job’s data

Gold recovers after the release of weaker-than-expected US job’s data. This increased safe-haven demand for the yellow metal and implied interest rates could fall faster than previously anticipated in the US – another positive for Gold, as it reduces the opportunity cost of holding the non-interest-paying asset. 

US JOLTS Job Openings fell to 7.673 million in July from a downwardly revised 7.910 million in June and below estimates of 8.100 million, according to data from the US Bureau of Labor Statistics on Wednesday. 

The data feeds into the fragile US labor market narrative that is driving Federal Reserve (Fed) interest rate expectations after Fed Chairman Jerome Powell sounded the warning on jobs in his speech at the Jackson Hole Symposium last month. 

It follows weak US manufacturing data on Tuesday,  which triggered a global market flash crash that was further exacerbated by fears about the Artificial Intelligence (AI) tech bubble bursting. 

From around 31% before the Manufacturing and JOLTS data, the probability of the Fed cutting interest rates by 0.50% at their September 18 meeting, rather than the standard 0.25%, has risen to 45%. 

ADP Employment Change and Jobless Claims follow on Thursday, but the main event on the calendar will be US Nonfarm Payrolls (NFP) on Friday. If NFPs increase less than expected, it would further support the case of the larger rate cut. 

On the geopolitical front, Reuters reports that US negotiators are preparing another ceasefire deal in Gaza whilst the war in Ukraine continues unabated. 

Technical Analysis: Two Hammer candlesticks in a row could signal recovery

Gold (XAU/USD) posts two bullish-looking Japanese Hammer candlesticks in a row (box on the chart below), and if Thursday closes as a solid green-up day, that would confirm a possible resumption of the broader uptrend. 

XAU/USD Daily Chart

The yellow metal’s price looks poised to rebound to the $2,531 all-time high if it can keep up the bullish recovery momentum. 

An upside target for Gold, which has not yet been reached, sits at $2,550 and remains active. The target was generated after the original breakout from the July-August range on August 14. 

Gold’s medium and long-term trends also remain bullish, which, given “the trend is your friend,” means the odds still favor an eventual breakout higher materializing. 

A break above the August 20 all-time high of $2,531 would provide more confirmation of a continuation higher toward the $2,550 target.  

If Gold continues steadily weakening, however, it is likely to find the next support in the $2,470-$2,460 region. A decisive break below that level would change the picture for Gold and suggest that the commodity might be starting a more pronounced downtrend.