Gold price rallied on Friday, as markets reacted to weak US Non Farm Payrolls (NFP) and unemployment rate data. Spot market gold hit an intraday high of $2,474 at the time of writing, up by 0.7 percent in the intraday session. Similarly, the commodity was up by 0.9 percent in the futures market, having tested an all-time high of $2,522 per ounce before subsiding. The commodity also enjoys safe haven demand, as Middle East tension remains high.
US NFP figures declined to 114k in July from June’s 179k, falling substantially below the forecast figure of 114k. Also, the unemployment rate rose by 0.2 percent to 4.3 percent beating the consensus forecast rate of 4.1 percent. The two indicators all but confirm expectations that the Federal Reserve will announce a rate cut in September. The only question now is whether the cut will be by 25 or 50 basis points. This could see the dollar decline significantly against gold in the coming days.
US treasury bond yields nosedived in the aftermath of the news, with benchmark 10-year bonds at 3.83 percent, having shed 14 basis points. That will add tailwinds to non-yielding gold. Meanwhile, tension remains high in the Middle East following Iran’s threats against Israel, triggered by the killing of Hamas political head, Ismail Haniyeh, in the nation’s capital, Tehran this week. This is an undercurrent to gold’s safe haven appeal and will provide propulsion for the upside.
Gold price is on a strong upward momentum, as shown on the 2-hour chart. After a long period above the middle Bollinger Band, it has just made two crossovers above the upper band, at the $2,471 mark. Meanwhile, the RSI is at 69, underlining the bullish control.
XAUUSD looks likely to continue the upside if the buyers maintain the price above 2,450. In that state, the upside could encounter the first resistance at 2,467. However, extended control by the buyers will break above that mark and build the momentum to test 2,480. Alternatively, a break below 2,450 will favour control by the sellers. That could see the establishment of the first support at 2,435, but extended control by the sellers could strengthen the downward momentum to breach that mark, invalidate the upside narrative and potentially test 2,419.
This post was last modified on Aug 02, 2024, 16:26 BST 16:26