XAUUSD Analysis Today: Potentially Up Ahead of "Non-Farm Payrolls" News

Andrew Fischer · 08 Dec 2023 7K Views


Technical Analysis

Continuation Bullish / Upward

Demand Level: 2031.90 - 2038.71

The prediction for Gold today shows a potentially high upward movement, mainly because the price has been residing in the support area for a while. There have been numerous rejection candles, indicating that a significant downward trend is unlikely as the overall trend for gold suggests an upward movement. Additionally, the dovish signals from Fed Chair Jerome Powell are pushing expectations that the Fed might lower interest rates, and other data, such as the payrolls released earlier this week, hint at a slowdown in the US job market. However, the market is awaiting definitive signals from the Nonfarm Payrolls data.

Fundamental Analysis

Gold prices moved slightly in Asian trading on Thursday (December 7th) as traders anticipated further signals for the cooling US labor market, while the focus remained on when the Federal Reserve plans to begin tapering interest rates.

The precious metal seems to have held within a trading range between $2,020 and $2,050/oz after surging to a record high above $2,100 earlier in the week.

Various factors have contributed to the gold rally. Signals of dovishness from Fed Chair Jerome Powell have fueled expectations that the Fed will reduce interest rates as early as March 2024.

However, the market has scaled back these expectations over the past week, particularly amid some signs of resilience in the US economy.

Increased demand for a safe haven, following the attack on a US ship in the Red Sea, has also supported gold prices, although the lack of escalation in the Middle East has eased tensions in the market.

Spot gold steadied at $2,026.30/oz, and futures gold set to expire in February fell 0.2% to $2,043.05/oz at 12:24 WIB (Western Indonesian Time).

Nonfarm payrolls take the spotlight as the market speculates on the Fed's interest rate cut. Traders are currently focused on the November nonfarm payrolls data, set to be released on Friday, to glean further insights into the labor market.

Job openings and payroll data released earlier this week hinted at a slowdown in the US labor market. However, the market is awaiting definitive signals from the nonfarm payrolls data.

The figures will also be released amid uncertainty about the timing of the Fed's interest rate cut. While the central bank is widely expected to hold interest rates next week, the market is uncertain about when the central bank might start easing policy.

So far, Fed officials have shown little inclination to start cutting interest rates, with Powell recently reiterating his stance on higher interest rates for a longer period. However, traders hope that declining inflation and the job market will prompt the Fed to change its stance in the coming months.

Gold is expected to benefit from Fed signals that are not overly hawkish and a cooling labor market. The precious metal has held at the $2,000 level since late November, which could indicate more strength in the coming weeks.

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