- Gold price is attempting to rebound after hitting a multi-month low on Friday.
- Technical analysis suggests that the XAU/USD price may drop further.
- The US will publish its nonfarm payrolls data this week.
- 1$3,953.00 ResistanceLowest swing in June and July, now break-and-retest resistance
- 2$3,800.00 Psychological level · TargetNext key psychological downside level to watch after retest
- 3$3,875.00 Multi-month low · SupportMulti-month low reached on Friday after hawkish Fed decision
- 4$4,697.00 August high · Key levelAugust peak before the strong sell-off this month
TradingView Lightweight Charts™ · Yahoo Finance data
Gold price dropped to a multi-month low of $3,875 on Friday as investors reacted to the hawkish Federal Reserve interest rate decision. It is now attempting to bounce back as investors buy the dip and as crude oil prices fall. XAU/USD remains 16.5% below its highest point in August this year.
Gold Price Technicals Suggest More Downside Possible
Technicals suggest that gold has been in a strong sell-off this month. It has dropped below the August high of $4,697 to the current $3,903.
Gold has slumped below the important support level of $3,953, its lowest swing in June and July this year. Moving below confirmed the bearish breakout.
Notably, it has slumped below the 50-day Exponential Moving Average (EMA), a sign that bears are in the drivers seat. It has also moved below the Supertrend indicator.
Therefore, the most likely XAU/USD forecast is moderately bullish, potentially to the resistance at $3,953. Such a move will confirm a break-and-retest pattern, which will lead to more downside over time. If this happens, the next key psychological level to watch will be at $3,800.
XAU/USD chart | Source: TradingView
Gold to React to US Nonfarm Payrolls Data
Gold will have several important catalysts this week. The most notable one will be the developments in the ongoing US-Iran war, where Qatar is trying to mediate between Iran and the United States. These talks explain why Brent and the West Texas Intermediate (WTI) continued falling today. Brent dropped to $108, while the WTI moved to $99.
Lower oil prices are bullish for gold because of its impact on inflation. If inflation drops, gold and other precious metals will likely bounce back as it will reduce the possibility of the Federal Reserve hiking interest rates in the December meeting.
Gold will also react to the upcoming US nonfarm payrolls (NFP) report. ADP will publish the private payrolls report on Wednesday, with analysts expecting the figure to come in at 68k, lower than the previous month’s 90k.
The Bureau of Labor Statistics (BLS) will publish the official NFP numbers. Economists expect the data to show that the economy added 63k jobs after adding 29k in the previous month. The unemployment rate is expected to remain at 4.2%.
A weak jobs report will be bullish for gold because it will lower the possibility of the Fed hiking interest rates in the December meeting. On the other hand, a strong jobs report will increase the possibility of the Fed hiking rates, which is bearish for gold.
What is your outlook on Gold?
Anonymous · no sign-up · results from the last 30 days · not investment advice