- Gold prices continue to receive support from expectations of a 50 bps Fed rate cut in September.
- Declining US bond yields and a weaker USD also provide a boost to the non-yielding metal.
- However, bullish sentiment remains cautious as investors await the US Nonfarm Payrolls (NFP) report on Friday.
Gold prices (XAU/USD) continue their sideways consolidation during the Asian session on Thursday, staying below the $2,500 psychological mark. Despite this, the commodity maintains its position above a nearly two-week low reached on Wednesday, supported by increasing expectations of a larger Federal Reserve (Fed) rate cut in September. This optimism is fueled by a US labor market report showing job openings fell to a three-and-a-half-year low in July. Additionally, the cautious market sentiment regarding the US economy provides further support for the safe-haven metal.
However, traders appear hesitant to make aggressive bullish moves with the critical US Nonfarm Payrolls (NFP) report set for release on Friday. As market participants await this key data, Thursday’s US economic releases—including the ADP report on private sector employment, Weekly Jobless Claims, and the ISM Services PMI—are expected to offer short-term trading opportunities. Despite this, the overall bias remains positive, suggesting potential for dip-buying at lower levels.
Daily Digest Market Movers: Gold Traders Await US NFP Report on Friday
The Job Openings and Labor Turnover Survey (JOLTS) from the US Bureau of Labor Statistics revealed that job openings dropped to 7.673 million in July, the lowest level since January 2021. Additionally, the June figure was revised down to 7.910 million from the previously reported 8.184 million, indicating further softening in the labor market.
The Federal Reserve's Beige Book reported that nine out of twelve regional districts saw flat or declining economic activity in August, up from five districts in mid-July. Atlanta Fed President Raphael Bostic noted that price pressures are diminishing rapidly and suggested that the central bank should avoid maintaining a restrictive policy stance for too long. Meanwhile, San Francisco Fed President Mary Daly emphasized the need for rate cuts to support a healthy labor market, though the extent of the cuts will depend on incoming data.
According to the CME Group's FedWatch Tool, there is about a 45% chance that the Fed will cut rates by 50 basis points at its upcoming meeting on September 17-18. This dovish outlook has pushed the yield on the rate-sensitive two-year US government bond to its lowest level since May 2023, and the benchmark 10-year US Treasury yield to its lowest since July 2023.
This has kept US Dollar bulls on the defensive and provided support for non-yielding Gold prices amid a generally softer tone in global equity markets. Traders are now looking to Thursday’s release of the US ADP report on private-sector employment and Weekly Initial Jobless Claims for insights ahead of Friday’s Nonfarm Payrolls report.
Technical Outlook: Gold Prices May Resume Uptrend if the $2,524-$2,525 Supply Zone Is Cleared decisively
From a technical standpoint, any further strength beyond the $2,500 psychological level is likely to face resistance around the $2,524-$2,525 supply zone, before reaching the all-time high near $2,531-$2,532 achieved last month. Continued buying momentum could act as a catalyst for the bulls and potentially resume the recent uptrend, supported by positive oscillators on the daily chart.
Conversely, the $2,471-$2,470 horizontal zone has emerged as immediate strong support. If the Gold price falls below this level, it could slide towards the 50-day Simple Moving Average (SMA), currently near $2,435. A decisive break below this SMA might trigger technical selling and expose the 100-day SMA, around $2,386, with intermediate support around the $2,400 level.
