Gold price looks delicate ahead of key NFP, Services PMI data

• Gold price seems fragile above $1,930.00 as the US labor market remains resilient while wage growth slows.
• Janet Yellen calls Fitch’s downgrade to US government long-term credit rating ‘entirely unwarranted’.
• Investors await US Services PMI, monthly Factory Orders, and weekly jobless claims data.

Gold price (XAU/USD) looks supported above the immediate support of $1,930.00, but the downside seems favored as the United States labor market data arrives more resilient than expectations. Stellar additions to private payrolls in July indicate that the Nonfarm Payrolls (NFP) report should outperform consensus on Friday. Additionally, Federal Reserve (Fed) policymakers may now consider a continuation of the rate-tightening cycle at its September policy meeting.

Strength in the US Dollar Index backed by a cautious market mood due to the Fitch downgrade also builds pressure on the Gold price. Apart from that, weak Gold demand reported by the World Gold Council (WGC) is consistently building pressure on the Gold price. Meanwhile, investors await ISM Services PMI data for further guidance.

Daily Digest Market Movers: Gold price eyes more downside ahead of NFP data

• Gold price looks set for a further breakdown as US labor market data turns out more resilient than expected.
• ADP reported on Wednesday that the US domestic labor market added an estimated 324K positions in July. The economic data outperformed expectations of 189K but remained lower than employment additions in June of 497K.
• Nela Richardson, chief economist at ADP, said, “The economy is doing better than expected, and a healthy labor market continues to support household spending.” She further added that the economy continues to see a slowdown in wage growth without broad-based job losses.
• Concerning the US wage index, ADP’s Richardson said that annual wages grew at their slowest pace of 6.2% since November 2021. For job changers, pay growth slowed to 10.2%.
• Upbeat ADP Employment Change data sets a positive undertone for Nonfarm Payrolls but discomfort for Federal Reserve policymakers as they could consider a further policy-tightening spell in the face of the tight labor market.
• Per estimates, US NFP report might show fresh additions of 200K jobs, slightly lower than June’s 209K. The US Unemployment Rate is expected to remain stable at 3.6%.
• Before the US NFP event, Services PMI data will be in focus, which will be published at 14:00 GMT. Unlike the contracting Manufacturing PMI, the service sector has consistently been in an expansionary phase, but analysts expect the July Services PMI to arrive lower at 53.0, below June’s reading of 53.9.
• New orders for Services PMI are expected to remain marginally higher at 55.6 against the former release of 55.5.
• In addition to US Services PMI data, Q2 Unit Labor Costs, weekly Initial Jobless Claims, and monthly Factory Orders will be in the spotlight.
• The US Dollar Index is approaching the crucial resistance of 103.00 as the market mood is quite cautious after Fitch downgraded the US government due to  fiscal spending and governance issues.
• US Treasury Secretary Janet Yellen called Fitch's downgrade to the US government ‘entirely unwarranted’ amid a resilient labor market, spending, and easing inflationary pressures.
• JPMorgan CEO Jamie Dimon called the US government's long-term debt rating downgrade ‘ridiculous’ since events on the basis of which it was downgraded were already known.
• Gold price is consistently facing pressure this week due to weak Gold demand reported by the World Gold Council (WGC). The agency reported a 2% YoY decline in purchases by global central banks due to higher interest rates and a costly gold price.
• Mixed commentary from Fed policymakers baffles investors about Fed policy guidance.
• Chicago Fed Bank President Austan Goolsbee favors further policy tightening despite easing inflationary pressures. Atlanta Fed Bank President Raphael Bostic thinks an interest rate hike in September is no longer required.
• Meanwhile, Jeffrey Schmid has been appointed Kansas City Fed Bank President.

Technical Analysis: Gold price delivers breakdown of H&S pattern

Gold price consolidates in a narrow range above the crucial support of $1,930.00. The precious metal faced selling pressure on Wednesday after slipping below the 20 and 50-day Exponential Moving Averages (EMAs). The yellow metal delivered a breakdown of the Head and Shoulders chart pattern, which confirms a bearish reversal. A decisive breakdown below $1,930.00 would expose the asset to the sound-level support of $1,900.00.