- 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 stuck in a somewhat sideways trend around the $2,050 mark as investors’ attention turns to the upcoming US job data.
The gold price has been hovering around the $2,050 mark for the past few weeks, as investor uncertainties remain high. With the US economy continuing to struggle due to the coronavirus crisis and the ongoing trade tensions between the US and China, investors have been playing it safe, purchasing gold as a hedge against any potential market volatility.
The gold price hit a seven-year high of $2,089 in August, however, it has since retraced slightly. Analysts now believe that the gold price will remain range-bound until more definitive news surfaces from the US and China.
The upcoming US non-farm payrolls report is expected to be a key factor when forecasting the direction of the gold price. The consensus forecast is for a rise of 1.4 million jobs, although many are expecting the number to be far higher or lower depending on the recovery of the US economy.
If the figures come in better than expected, then it could provide some support to the US dollar and could put some pressure on the gold price. Conversely, if the figures are worse than expected, the gold price could benefit from safe-haven demand as investors flock to the gold markets in search of returns.
Overall, the gold price is expected to remain range-bound until there is more clarity on the US and China trade situation and the US job data. In the immediate term, investors should continue to focus on the upcoming non-farm payrolls report for clues as to the direction of the gold price.
