Gold price tries to recover from three-week lows.
The price of gold is on course to record its worst week in six on Friday. So another down week is in the works. However, in the run-up to the US Nonfarm Payrolls (NFP) showdown. The sustained decline in the US Dollar (USD). And declining US Treasury bond yields are assisting in providing a floor under gold price.
The US labor market report is the focus of attention.
This Friday, as markets open, an enhanced risk attitude. In Asia will work against the US dollar are anticipating the Chinese government to unveil stimulus measures. In an effort to jump-start the sluggish post-Covid economic recovery. The US S&P 500 futures are up 0.30 percent for the day. As traders ignore the conflicting Thursday after-hours earnings reports from Amazon and Apple Inc. The US dollar’s potential decline is expected to be constrained because investors might become more cautious. As the release of the US jobs data approaches.
US Treasury bond rates and the US Dollar have declined as a result of mixed US statistics.
The headline Nonfarm Payrolls report, which is predicted to come in at 200K. And pay inflation will be the key topics of discussion. In July, average hourly earnings are projected to climb 4.2% YoY compared to the prior increase of 4.4%. Soft wage inflation data and a disappointing NFP print will Increase the likelihood. That people would believe the US Federal Reserve (Fed) is nearing the conclusion of its tightening cycle, which will support the price of gold but hurt the US dollar and US Treasury bond yields. On the other hand, positive US job market statistics can rekindle wagers on additional Fed rate hikes later this year, igniting a new downward trend in the price of gold that doesn’t pay interest.
Due to gloomy US economic data releases on Thursday, the greenback was unable to hold at monthly highs and fell. While the highly anticipated ISM Services PMI decreased to 52.7 in July vs. 53.0 projected, the US Jobless Claims and the Q2 Unit Labor Cost Index both showed mixed results. But in the recently released data, the US ISM Services Prices Paid sub-index unexpectedly increased to 56.8. After hitting new three month lows around $1,930 earlier in the day, the price of gold has since returned above that level due to conflicting US data and a cautious market atmosphere.
Gold Technical Analysis
Ahead of the announcement of the US NFP, the gold market is attempting to continue its recent uptrend. The gold price is anticipated to resume its recovery above the negative 50 Daily Moving Average (DMA) around $1,945 if the US jobs report is disappointing. At that level, the triangular support is also aligned.
Recall that on Tuesday, the price of gold confirmed the breakdown of a symmetrical triangle on the daily chart.
It will take a test of the bullish 21 DMA at $1,953 to retake the latter. A persistent break above the latter will allow for a rally in the direction of the $1,969 flat-line 100 DMA.
However, given that the 14-day Relative Strength Index (RSI) signal is still below the midline, there are still downside concerns for the price of gold.
Gold price will be dragged down toward the stable support observed at $1,925 if it is unable to gain acceptance above the formidable barrier at $1,945.
The early July lows of $1,910 will be put to the test if the gold market sell off continues.
