- Gold price is in a sideways auction around $2,050.00 ahead of the US Employment data.
- The Fed is likely to restrict itself from raising rates further amid deepening US banking crisis, and slower growth rate.
- Gold price is building a base near the demand zone plotted in a narrow range around $2,050.00.
Gold price (XAU/USD) is showing signs of volatility contraction around $2,050.00 in the Asian session. The precious metal is struggling to make a decisive move as investors are awaiting the release of the United States Nonfarm Payrolls (NFP) data for further action.
The US Dollar Index (DXY) is failing to find an intermediate cushion and is declining firmly. The USD Index has dropped to near 101.16 as the Federal Reserve (Fed) is likely to restrict itself from raising interest rates further amid deepening US banking crisis, slower growth rate, and easing US labor market conditions.
On Thursday, weekly Initial Jobless Claims for the week ending April 28 jumped to 242K vs. the consensus of 240K and the former release of 229K.
However, the street would get more clarity after the release of the US Nonfarm Payrolls (NFP) data. As per the consensus, the US labor market witnessed a fresh addition of 179K payrolls in April, which was lower than former additions of 236K. The catalyst that will hijack the attention of investors would be the Average Hourly Earnings data. The street is anticipating steady earnings numbers, however, a better-than-expected print would renew fears of recovery in inflationary pressures.
Apart from that any development on debt ceiling concerns would turn the USD Index extremely volatile.
Gold technical analysis
Gold price is building a base near the demand zone plotted in a narrow range around $2,050.00 on a two-hour scale. The precious metal fell sharply after printing an all-time high of $2,079.77. The 10-period Exponential Moving Average (EMA) at $2,047.00 is providing cushion to the Gold bulls.
Meanwhile, the Relative Strength Index (RSI) (14) is still oscillating in the bullish range of 60.00-80.00, indicating that the upside bias is holding momentum.
Gold two-hour chart
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The gold price is currently bouncing around $2,050 as investors wait for key US job data later this week.
Gold has been fairly range-bound over the last month, despite the US dollar index and US Treasury yields reaching multi-month lows. The precious metal, a traditional hedge against inflation, failed to benefit from the recent drop in both last week, as the focus shifted to the upcoming US Non-Farm Payrolls report.
The latest data shows that the US economy added 559,000 non-farm payrolls in May, which beat the 500,000 forecast. This could be seen as a sign of recovery and further economic progress, indicating that further gains could be on the horizon.
This data could put additional pressure on the US dollar and extend the low that it hit last week in the coming days. As a result, this could provide a boost for gold prices, as a weaker US dollar is generally seen as bullish for gold.
However, there are still some other factors that could weigh on gold prices. For example, if inflation rises faster than expected, this could be bearish for gold prices, as the metal is often used as a hedge against inflation. In addition, further progress on coronavirus vaccine rollouts could also weigh on gold prices, as this could increase risk appetite and reduce the demand for the metal.
Overall, the gold price is still largely range-bound, trading within a range of $2,030-$2,070. However, the upcoming US job data could have a major impact on the metal and determine whether it breaks out of this range or continues to remain sideways.