The price of gold has surged to $2517 USD per troy ounce, marking a return to growth. This increase comes as the market eagerly anticipates the release of the crucial US employment report for August. The data from this report could have significant implications on the Federal Reserve’s interest rate outlook, especially with an upcoming Fed meeting on the horizon. Lower interest rates could potentially make holding gold as a non-yielding asset more appealing, driving further price increases in the precious metal.
The recent statistics on the US employment market have painted a bleak picture, with private employers hiring at the slowest pace in 3.5 years. This slowdown in hiring has been accompanied by a decline in job vacancies and a drop in manufacturing activity. These factors collectively indicate a weakening US economy, further fueling expectations of a 50-basis points rate cut by the Federal Reserve in September. Investors are currently pricing in a 41% probability of this rate cut, signaling a high level of uncertainty in the market.
In terms of technical analysis, the XAUUSD chart shows signs of a potential growth wave towards $2555.50. The precious metal has received support at $2472.00 and is currently consolidating around the $2513.62 level. An upside breakout from this consolidation range could pave the way for further price increases. The MACD indicator confirms this bullish scenario, with its signal line trending above zero.
On the shorter time frame of the H1 chart, the market has completed a growth wave to $2513.62. The price range now extends upwards to $2523.20 and downwards to $2504.00. A breakout in either direction could determine the future trend of gold prices, with a decline to $2491.55 or a continuation towards $2555.50 being possible outcomes. The Stochastic oscillator supports this analysis, showing signs of a potential decline from the overbought levels.
The surge in gold prices amidst an uncertain economic outlook reflects the market’s cautious optimism and hedging against potential risks. With the upcoming US employment report and Federal Reserve meeting, investors will closely monitor any developments that could further impact the price of gold. Uncertainty remains high, but technical indicators suggest a bullish trend may continue in the near term.