Gold price consolidates as investors await labor market report

• Gold price remains directionless as US NFP release to set the undertone for Fed policy.
• Thursday’s United States economic calendar failed to trigger action in the Gold price.
• The market mood turns positive as investors digest Fitch’s downgrade of the US government long-term debt rating.

Gold price (XAU/USD) trades back and forth as investors are sidelined ahead of the United States Nonfarm Payrolls (NFP) report. The precious metal struggles to deliver a decisive move as the labor market report will set a fresh undertone for the Federal Reserve’s (Fed) September monetary policy. Preliminary consensus is in favor of further resilience in the labor market despite aggressive rate-tightening by the central bank and tight credit conditions.

Thursday’s economic calendar failed to trigger action in the Gold price despite the US Services PMI underperforming in July and the labor cost index growing at a slower pace in the April-June quarter. US factory activities are already in a contracting phase, therefore, resilience in the labor market seldom is a holding hand with the US Dollar and a restrictive measure for the Gold price.

Daily Digest Market Movers: Gold price awaits US NFP

• Gold price extends consolidation as investors await US labor market data for further guidance.
• The precious metal failed to find a decisive move despite the US Services PMI delivering an underperformance and the labor cost index softening further on Thursday.
• US Services PMI for July remained lower at 52.7 against expectations of 53.0 and June’s reading of 53.9. Also, new orders at 55.0 remained surprisingly lower than an upwardly revised consensus of 55.6 and the former release of 55.5.
• Crucial support for higher inflation in the US economy continues to be the rising labor cost index, but significantly weak growth in the wage cost index in the April-June quarter eases consumer inflation expectations.
• Q2 Unit Labor Costs grew at a pace of 1.6% vs. investors’ expectations of 2.6% and a Q1 figure of 3.3% as the context of quick job change starts fading.
• Monthly Factory Orders for June turned out surprisingly higher at 2.3% than upwardly revised expectations of 2.2% and May’s print of 0.4%.
• The US economic calendar remains full of crucial events this week, but the show-stopper is the NFP report, which will be published at 12:30 GMT.
• Wednesday’s July ADP Employment Change report set a positive undertone for the crucial NFP report. The ADP reported that the US labor market added fresh 324K new jobs to payrolls in July versus expectations of 189K.
• About NFP expectations, TD Securities expects payrolls to stay strong in July, registering a 260K gain, and also to reflect a reacceleration from June's 209K print. Economists at TD Securities look for the unemployment rate to drop to 3.5%, as job creation in the household survey will print a similar gain to that of the establishment survey.
• Also, Average Hourly Earnings will be of utmost importance. Per estimates, monthly wage data should grow at a pace of 0.3%, slower than the 0.4% recorded for June. Annual data is seen declining to 4.2%.
• Gold price remains directionless as Fed policymakers deliver mixed interest rate 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, Richmond Federal Reserve President Thomas Barkin said on Thursday that June’s inflation print was a good read. The Fed policymaker refrained from delivering guidance over policy action.
• The US Dollar Index looks lost in the 102.40-102.80 range as the focus shifts to labor market data.
• The market mood turns positive as investors digest Fitch’s downgrade of the US government's long-term debt rating.
• US Secretary of State Blinken: I have not received a response yet from China's Foreign Minister Wang Yi on the invite to Washington. Blinken expects to have an opportunity to meet.

Technical Analysis: Gold price juggles above $1,930

Gold price oscillates in a narrow range above the crucial support of $1,930.00 as investors await US NFP for further guidance. The precious metal is exposed to the further downside amid a breakdown of the Head and Shoulders chart pattern on a smaller time frame. The yellow metal trades below the 20 and 50-day Exponential Moving Averages (EMAs), which portrays a bearish trend.