Gold price managed to hold above a multi-week low on Tuesday as the US Dollar (USD) recovery lacked follow-through amid growing expectations of interest rate cuts by the Federal Reserve (Fed). The non-yielding yellow metal was supported by softer US macro data and geopolitical risks in the Middle East. Despite the supporting factors, XAU/USD struggled to attract buyers as investors awaited the release of the crucial US monthly jobs data. The US ADP report on private-sector employment and the US ISM Services PMI were expected to provide short-term opportunities for traders. The focus remained on the upcoming Nonfarm Payrolls report on Friday to determine the next move for XAU/USD.
The USD staged a modest bounce on Tuesday, exerting downward pressure on the Gold price while dismal US macro data helped limit losses. The Job Openings and Labor Turnover Survey (JOLTS) report showed a significant decrease in job openings, pointing to signs of a cooling US economy. The risk of a softer US economy led to increased bets for a September rate cut by the Fed, pushing US Treasury bond yields lower. Traders awaited the release of the ADP report on private-sector employment and the ISM Services PMI for short-term trading opportunities while focusing on the upcoming Nonfarm Payrolls report for further direction.
From a technical perspective, Gold price appeared vulnerable below the 50-day Simple Moving Average (SMA) as oscillators on the daily chart started gaining negative traction. A break below the multi-week low around the $2,315-2,314 area could reaffirm the bearish bias, potentially dragging XAU/USD below the $2,300 mark. Upside resistance was seen near the $2,349-2,350 supply zone, with further hurdles around the $2,360-2,364 area. Clearing these levels could push Gold price towards higher targets, including the $2,385 intermediate hurdle and eventually the $2,450 region.
Gold has historically served as a store of value and medium of exchange, with its status as a safe-haven asset growing in turbulent times. Central banks are the largest holders of Gold, adding to their reserves to improve the perceived strength of their economies and currencies. The precious metal has an inverse correlation with the US Dollar and US Treasuries, making it an attractive investment during Dollar depreciation and market turbulence. Gold prices can be influenced by various factors such as geopolitical instability, interest rates, and the behavior of the US Dollar.
Overall, Gold price remained stable above a multi-week low amidst a modest USD recovery and increased Fed rate cut expectations. Geopolitical risks and softer US macro data supported the safe-haven asset, while traders awaited key economic reports for short-term trading opportunities. Technical analysis showed potential downside risks for Gold price below the 50-day SMA, with key resistance levels to watch for potential upside movements. Despite short-term fluctuations, Gold’s status as a safe-haven asset and its historical value as a store of wealth continue to attract investors looking to diversify their portfolios.
