XAU eyes NFP after Powell

Gold forecasts and analysis

  • Fed Chairman Powell increases his cautious bets.
  • The US ISM Services Purchasing Managers’ Index (PMI) and Non-Farm Payrolls (NFP) report will be in the spotlight next week.
  • Gold may be heading lower in the overbought zone next week.

Upgrade your trading skills and gain a competitive advantage. Get our Q4 Gold Forecast today for exclusive insights into key market catalysts that should be on every trader’s radar.

Recommended by Warren Venketas

Get your free gold forecast

Fundamental forecast for XAU/USD

Gold prices rose on Friday after the US ISM Manufacturing PMI came in disappointing, followed by Federal Reserve Chairman Jerome Powell providing some less aggressive messages, which could signal the peak of the Fed’s lifting cycle. Although Mr. Powell tried to refrain from sounding overly pessimistic, the market did not heed the sentiment. Some key phrases include:

“Fed funds range well into restricted territory.”

“It’s too early to say that Monetary policy Restricted enough.”

“I expect spending and production to slow over the next year.”

From a money market perspective (see table below), interest rates are expected to be below 4% by December 2024. The recent string of US economic data has contributed to this narrative along with a decline in US Treasury yields as the end of the two years approaches. Towards the 4.5% support level.

Embedded Federal Reserve Funds Futures

Source: Refinitiv

Next week will see the focus on ISM Services Purchasing Managers’ Index (PMI) data. The most important of the two PMI releases is that the United States is primarily a services-driven economy. Gold bulls will see a rise to 52 with upcoming week’s highlights from the Non-Farm Payrolls (NFP) report. The strong non-farm payrolls figure could reflect gold’s recent rally, while another supporter of the upside stems from the resumption of the war between Israel and Hamas in Gaza. The safe-haven appeal of bullion has returned after the recent ceasefire and any escalation could keep prices high.

See also  Ford warns investors of an additional $1 billion in supply chain costs in the third quarter

Golden economic calendar

source: DailyFX

Do you want to stay up to date with the latest relevant trading information? Subscribe to our bi-weekly newsletter and stay informed of the latest market-moving events!

Trade smarter – Subscribe to the DailyFX Newsletter

Get timely and compelling market commentary from the DailyFX team

Subscribe to the newsletter

Technical Analysis

Gold price daily chart

Chart prepared by Warren VenketasTrading View

The daily XAU/USD price action appears to be heading towards the March 2022 and May 2023 resistance zone around the area. 2081.82 level. The Relative Strength Index (RSI) is deep in the overbought zone and could indicate a bearish pullback. However, the bulls will be eyeing the looming golden cross formation that could lead to an extension of the recent rally.

Resistance levels:

Support levels:

  • 2048.79
  • 2000.00
  • 1987.42
  • 1950.00

IG Gold Client Sentiment: Mixed

IGCS shows that retailers are currently net short On gold, with 53% of traders currently holding long positions.

Are you curious to know how market conditions can affect asset prices? Our emotions guide has ideas, download it now!

Introduction to technical analysis

Market sentiment

Recommended by Warren Venketas

Contact and follow @Warrenon Twitter:@WVenketas

DailyFX Provides Forex news and technical analysis on trends affecting global currency markets.

Leave a Reply

Your email address will not be published. Required fields are marked *