Market Analysis

Gold Price Surges Above $2,460 as U.S. Yields Drop Ahead of Nonfarm Payrolls

Amos Simanungkalit · 02 Aug 2024143.2K Views

Gold prices (XAU/USD) demonstrated significant strength during Friday’s European session, just ahead of the release of the US Nonfarm Payrolls (NFP) data for July, scheduled for 12:30 GMT. This employment report will shed light on the labor market's current status, impacting market expectations regarding a potential US Federal Reserve (Fed) rate cut in September.

The forecast for the US NFP report suggests an increase of 175,000 new jobs in July, down from the previous addition of 206,000. The Unemployment Rate is expected to hold steady at 4.1%.

Investors will also scrutinize the Average Hourly Earnings data, a crucial indicator of wage growth that drives consumer spending and inflationary pressures. Annual wage growth is projected to decelerate to 3.7% from the previous 3.9%, with a monthly increase anticipated at 0.3%. Weaker-than-expected wage growth could ease inflation concerns, thereby enhancing the likelihood of a Fed rate cut. Conversely, stronger wage data could undermine these prospects.

Amid escalating tensions between Iran and Israel, particularly following Iran's vow to retaliate for the killing of Hamas leader Ismail Haniyeh in an Israeli airstrike, gold's appeal as a safe-haven asset has strengthened.

Technical Analysis: Gold Price Surges Above $2,460

Gold is currently trading in a channel pattern on the daily chart, showing a gradual upward trend but largely moving sideways over the past three months. The 50-day Exponential Moving Average (EMA) near $2,370 continues to support the bullish momentum in gold prices.

The 14-day Relative Strength Index (RSI) is rising towards 60.00. A breakthrough above this level could signal an upward shift in momentum.

A new rally could emerge if gold breaks above its all-time high of $2,483.75, potentially pushing prices into new territory.

On the downside, the upward-sloping trendline at $2,225, drawn from the October 6 low near $1,810.50, is expected to offer substantial long-term support.