Gold price jumps above $2,460 as US yields decline ahead of US NFP

• Gold price climbs above $2,460 as the US bond yields and the US Dollar face pressure ahead of the US NFP for July.
• The Fed appears comfortable with market speculation for interest rate cuts in September.
• Higher jobless claims and lower Unit Labor Costs point to a slowdown in US labor demand.

Gold price (XAU/USD) exhibits sheer strength in Friday’s European session ahead of the US Nonfarm Payrolls (NFP) data for July, which will be published at 12:30 GMT. The official Employment data will indicate the current status of the labor market, which will influence market speculation for a US Federal Reserve (Fed) rate cut in September.

The US NFP report is expected to show that 175K new workers were hired in July, a decrease from the previous addition of 206K. The Unemployment Rate is expected to remain steady at 4.1%.

Investors will also focus on the Average Hourly Earnings data, a key measure of wage growth that fuels consumer spending and eventually drives price pressures. Annually, the wage growth measure is estimated to have decelerated to 3.7% from the prior reading of 3.9%, with the monthly figure growing steadily by 0.3%. Softer-than-expected wage growth data will diminish fears of persistent inflation, which will strengthen Fed rate-cut prospects. On the contrary, stubborn numbers would weaken them.

Meanwhile, deepening risks of an all-out war between Iran and Israel have improved the Gold’s safe-haven appeal. Iran vows to retaliate against the killing of Hamas leader Ismail Haniyeh by an Israeli air strike in Tehran.

Daily digest market movers: Gold eyes all-time highs on multiple tailwinds

• Gold price rises further to near $2,470 in Friday’s European session. The precious metal aims to recapture all-time highs above $2,480 as the US bond yields and the US Dollar (USD) have weakened.
• 10-year US Treasury yields post a fresh six-month low near 3.95%, as speculation for the Federal Reserve to begin reducing interest rates in September appears to be certain. Lower yields on interest-bearing assets reduce the opportunity cost of holding an investment in non-yielding assets, such as Gold. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges lower to near 104.25.
• The expectations for the Fed to pivot to policy normalization in September were prompted after Fed Chair Jerome Powell delivered a dovish guidance on interest rates. On Wednesday, the Fed left interest rates steady in the range of 5.25%-5.50% but said that rate cuts would be on the table in September if inflation declines more or less in line with expectations, growth remains reasonably strong, and the labor market remains consistent with current conditions.
• Also, weak United States (US) ISM Manufacturing Purchasing Managers’ Index (PMI) for July, the highest Initial Jobless Claims in 11 months for the week ending July 26, and lower preliminary Q2 Unit Labor Costs have spurted upside risks to a slowdown in the economy and labor demand.
• The PMI report showed that activity in the manufacturing sector contracted at a faster pace to 46.8. Individuals claiming jobless benefits for the first time were higher at 249K than estimates of 236K and the former release of 235K. Unit Labor Costs, a key measure of total cost borne by employers for onboarding workers, grew at a very slower pace of 0.9% from expectations of 1.8% and the prior release of 3.8%.

Technical Analysis: Gold price rises above $2,460

`

Gold price trades in a channel pattern on a daily timeframe, which is slightly rising but broadly exhibited a sideways performance for more than three months. The 50-day Exponential Moving Average (EMA) near $2,370 continues to provide support to the Gold price bulls. 

The 14-day Relative Strength Index (RSI) moves higher to near 60.00. If the RSI climbs above that level, the momentum will shift to the upside.

A fresh upside would appear if the Gold price breaks above its all-time high of $2,483.75, which will send it into unchartered territory.

On the downside, the upward-sloping trendline at $2,225, plotted from the October 6 low near $1,810.50, will be a major support in the longer term.