Gold price (XAU/USD) has been consolidating within a tight range above $2,070 during the European morning session following a reversal from all-time highs at the $2,150 area.
The US Dollar (USD) is trimming some losses at the week’s opening, with US Treasury yields picking up as the risk appetite witnessed on Friday faded. Investors have turned their focus to a set of high-tier US indicators, with the all-important US Nonfarm Payrolls (NFP) closing the week, for more insight into the Federal Reserve’s next monetary policy steps.
Technical reasons have contributed to the precious metal’s recent pullback, as the strongly overbought levels reached at the mentioned $2,150 level have prompted a profit-taking reaction from Gold buyers.
Fundamentals, however, remain favouring Gold amid a combination of softer inflation and weaker US macroeconomic data. In this context, Fed Chairman Powell’s remarks on Friday, pledging to be careful with rate hikes boosted hopes that the tightening cycle is over, increasing speculation about rate cuts in March.
Beyond that, the increasing tensions in the Middle East have reactivated fears of an escalation of the conflict, which would involve other countries in the region. In China, news about an outbreak of another respiratory virus has increased concerns about another setback for the world’s second-largest economy and hence for the global economic outlook. These concerns are likely to underpin support for the safe-haven Gold.
In the calendar, we have a relevant amount of key US Data, starting with the ISM Services PMI and JOLTS Job Openings data on Tuesday, ahead of Wednesday’s ADP to lay the ground for Friday’s Nonfarm Payroll (NFP) report. These readings are expected to have a relevant impact on US yields and, by extension, on Gold prices.
From a technical perspective, the XAU/USD’s corrective reversal has been contained above previous highs at $2,050, which leaves the broader bullish trend intact.
Four-hour charts show the metal standing comfortably above the upward-trending 50-hour SMA, with the RSI retreating from extremely overbought levels.
On the downside, support levels at $2,050 and $2,030 are expected to provide support ahead of the $2,000 psychological level. Resistances are 2,095 and 2,165.
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | 0.16% | 0.32% | 0.28% | 0.44% | 0.18% | 0.33% | 0.50% | |
EUR | -0.17% | 0.17% | 0.12% | 0.29% | 0.01% | 0.19% | 0.35% | |
GBP | -0.35% | -0.16% | -0.03% | 0.14% | -0.14% | 0.02% | 0.17% | |
CAD | -0.28% | -0.13% | 0.03% | 0.16% | -0.14% | 0.06% | 0.20% | |
AUD | -0.44% | -0.32% | -0.15% | -0.20% | -0.31% | -0.12% | 0.04% | |
JPY | -0.20% | 0.01% | 0.32% | 0.13% | 0.30% | 0.18% | 0.34% | |
NZD | -0.33% | -0.17% | -0.02% | -0.04% | 0.11% | -0.16% | 0.15% | |
CHF | -0.52% | -0.35% | -0.17% | -0.20% | -0.04% | -0.34% | -0.15% |
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).
The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.
Read more.Next release: 12/08/2023 13:30:00 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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