Gold price (XAU/USD) meets with a fresh supply on Thursday and erodes a part of the previous day's recovery gains from a nearly four-week low. The Federal Reserve (Fed) Chair Jerome Powell told reporters on Wednesday that inflation was too high and progress in bringing it down was uncertain. This suggested that the Fed will keep rates higher for longer, which pushes the US Treasury bond yields higher and turns out to be a key factor undermining the non-yielding yellow metal.
Apart from this, a generally positive risk tone further contributes to driving flows away from the safe-haven Gold price. Meanwhile, Powell downplayed the risk of any further interest rate hikes, which fails to assist the US Dollar (USD) to attract any meaingful buyers and languish near a two-week low touched last Friday as . This, in turn, could lend some support to the XAU/USD and help limit the downside ahead of the closely-watched US Nonfarm Payrolls (NFP) report on Friday.
From a technical perspective, weakness back below the $2,300 mark now seems to find decent support near the $2,280 level. The latter coincides with the 50% Fibonacci retracement level of the March-April rally, which, if broken decisively, should pave the way for deeper losses. The Gold price might then accelerate the fall towards the next relevant support near the $2,268-2,265 area en route to the $2,230-2,225 region and the $2,200 round figure.
On the flip side, the immediate hurdle is pegged near the $2,335 supply zone ahead of the weekly top, around the $2,352-2,353 area. A sustained strength beyond could lift the Gold price to the $2,371-2,372 resistance en route to the $2,400 round figure and the all-time peak, around the $2,431-2,432 area touched on April 12.
The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.
Read more.Next release: Fri May 03, 2024 12:30
Frequency: Monthly
Consensus: 243K
Previous: 303K
Source: US Bureau of Labor Statistics
America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.
Keep up with the financial markets, know what's happening and what is affecting the markets with our latest market updates. Analyze market movers, trends and build your trading strategies accordingly.