Gold price unable to take advantage of weekly bullish gap; increasing USD demand inhibits advancement

9 October 2023, Monday
Gold price unable to take advantage of weekly bullish gap; increasing USD demand inhibits advancement

Gold Price Rallies After US Jobs Report


Gold Price Rebounds After US Jobs Data


The price of gold, also known as XAU/USD, experienced a significant turnaround on Friday. It rallied over 1.3% from its lowest level since March 8th. This drop in price was caused by the release of the United States’ monthly jobs data. The report indicated that the Federal Reserve (Fed) may raise interest rates in 2023, which negatively impacted the value of gold.


However, the report also revealed that wage growth remained moderate, easing concerns about inflation. This might lead the Fed to adopt a less aggressive stance on interest rates. As a result, the US Dollar (USD) weakened for the third consecutive day, leading to a surge in gold prices and ending a nine-day losing streak.


Geopolitical Tensions Boost Gold Price


In addition to the US jobs report, escalating tensions in the Middle East contributed to the rise in the XAU/USD price. The gold price opened the week with a bullish gap and reached a one-week high. However, it struggled to maintain its strength beyond the $1,855 mark. Traders are now eagerly awaiting the release of the FOMC meeting minutes and US consumer inflation figures later this week for further market direction.


US Jobs Report Details


The US jobs report for September showed that the economy added 336,000 jobs, surpassing expectations. The previous month’s reading was also revised higher. Average Hourly Earnings rose by 0.2% in September, matching the gain in August. Over the past 12 months, earnings increased by 4.2%, slightly lower than the previous 4.3% increase.


Gold Price Outlook


Despite the recent rebound in gold prices, technical indicators suggest that the overall trend is still downward. The Relative Strength Index (RSI) on the daily chart indicates oversold conditions. However, the 50-day Simple Moving Average (SMA) falling below the important 200-day SMA suggests that the path of least resistance for gold is still downward. Therefore, any further price increases may be short-lived and could present selling opportunities.


Key Levels to Watch


Currently, the gold price faces resistance near the $1,855-1,856 region. If it surpasses this level, the next significant hurdle is around $1,865. Further buying pressure could push the price towards the $1,885 area, followed by the key level of $1,900. On the downside, immediate support is expected around the $1,835-1,834 region. If this level is breached, the XAU/USD could drop to the $1,820 support level and potentially reach the multi-month low around $1,810.