Gold Price Forecast: US job data forecast pushing XAU/USD below $1,805

  • Bureau of Labor Statistics is releasing the unemployment rate, average hourly earnings, and non-farm payroll data today.
  • Economists are expecting a surge in Non-Farm Employment Change figures from 850K to 870K.
  • Forex trading market participants may sell below $1,806 to target the $1,793 and $1,985 levels on Friday.

Gold prices were closed at $1805.55 after placing a high of $1817.85 and a low of $1799.85. It dropped for a third straight session as the US dollar was strong across the market. Gold price forecast remains bearish ahead of the US NFP figures today.

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Positive US Job data (Non-farm Payroll) Forecast Keeping Gold Bearish

The US dollar rose on Thursday and placed gains for the third consecutive session ahead of the release of US jobs data scheduled for Friday. The Bureau of Labor Statistics is releasing the unemployment rate, average hourly earnings, and non-farm payroll data during the New York session today. 

Economists are expecting a surge in Non-Farm Employment Change figures from 850K to 870K. The anticipated surge of 20K jobs is suggesting a better economic condition in the US. Therefore, traders are directing their investments to the dollar to price-in the optimistic NFP forecast. 

Besides, the unemployment rate is expected to drop from 5.9% to 5.7%. That’s also scheduled with an optimistic forecast; that’s the reason investors are buying the US dollar. Increased demand for the US dollar is placing a bearish impact on gold, as both assets share a negative correlation. Furthermore, the hawkish comments from the Fed Governor also added strength to the already rising prices of the US dollar. 

The US Dollar Index (DXY), which measures the greenback’s value against the basket of six major currencies, rose for the day and reached 92.35, which ultimately kept the precious metal under pressure.

Hawkish Remarks of Governor Christopher Waller Weighs on Gold

Meanwhile, Fed Governor Christopher Waller said that the US economic recovery was progressing rapidly. The labor market showed improvements, raising the Federal Reserve’s chances to start withdrawing its accommodative monetary policy sooner than expected.

Waller was highly hopeful for the July jobs report that is scheduled to release on Friday. He repeated the possibility that the US labor market will recover about 85% of the jobs lost by September during the coronavirus pandemic. The reading was presented after accounting for close to 2 million people who retired during the public health crisis.

Waller also gave his reviews about inflation and said that he considered the rising inflationary pressures as transitory. However, there are risks that these higher prices could stay longer than expected. He further predicted that investors might see some relief on price pressures in the fourth quarter of this year. These comments from Waller added extra strength to the US dollar and dragged gold prices lower.

Fundamental’s Review Impacting Gold & Dollar

On the data front, at 16:30 GMT, the Challenger Job Cuts in July came in as -92.8% against the previous -88.0%. At 17:30 GMT, Unemployment Claims from last week remained flat with the expectations of 385K. From June, the Trade Balance dropped to -75.7B against the projected -74.2B and weighed on the US dollar that further caped loss in gold prices.

The main reason behind the declining gold’s bearish trend is the hawkish comments from a top Federal Reserve official. They reinforced the bets for early tapering of asset purchases by the US Central Bank. 

Moreover, the investors are also keenly waiting for Friday’s NFP data release that could provide a deeper hint about the reduction of the Fed’s accommodative stance towards the economy.

Ahead of the critical jobs report, the gains in the US dollar were also little as investors were cautious about placing strong bids before jobs data. Hence, the trading volume and loss in precious metals are limited for now, and we may see sharp volatility upon the release of NFP. 

Gold Price Forecast – Technical Levels

Gold – XAU/USD – 4-Hour Chart

Support Resistance

1797.65 1815.65

1789.75 1825.75

1779.65 1833.65

Pivot Point: 1807.75

Gold Price Forecast – Daily Technical Analysis: XAU to Target $1,793

Gold price forecast remains bearish below the $1,805 level. However, investor’s major focus will be on the US NFP and Unemployment rate data. Let’s recall my Gold Price Forecast – Aug 05. gold has already violated the $1,809 support level. 

The closing of candles below this is suggesting a strong selling trend in gold. Therefore, gold’s immediate target is likely to be the triple bottom support level of $1,793. A bearish breakout below this level can trigger an additional selling trend until the next support level of 1,785 level.  

On the 4-hourly chart, the yellow metal has formed the “Three Black Crows” pattern suggesting solid bearish sentiment among gold traders. In contrast, the 50 days EMA (exponential moving average – red line) will be extending a hurdle at the $1,810 level. Bullish crossover above 50 EMA can lead the gold price towards $1,820 and $1,833.

The Forex trading market participants may sell below $1,806 to target the $1,793 and $1,985 levels on Friday. Conversely, the buy limit can be placed above the $1,793 before the release of NFP figures. All the best!

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