Gold prices are gearing up for a potential rally towards the coveted $2,000 mark as the US Nonfarm Payrolls (NFP) data release looms. The market’s focus remains fixated on the upcoming US labor market report, particularly the headline NFP figure and the trajectory of wage inflation, both of which are crucial indicators for the future course of the Federal Reserve’s tightening policy.
US Dollar and Treasury Yields Remain Unsteady Gold’s surge is being fueled by the weak performance of the US Dollar and the US Treasury bond yields, which continue to grapple with volatility following the uncertain US Federal Reserve policy outlook. With the Federal Reserve potentially putting an end to rate hikes, the US Dollar faced a sell-off, causing the benchmark 10-year US Treasury bond yields to breach the 4.70% level. Moreover, the Bank of England’s (BoE) hawkish pause further weighed down on the US Dollar.
Gold’s Resilience Amidst Market Fluctuations Despite the global risk rally and a subsequent surge in US stocks, Gold managed to hold its ground, ending the day on a positive note around $1,985. Market expectations are leaning heavily towards the likelihood that the Federal Reserve will maintain rates unchanged in December, contributing to the precious metal’s stability.
Outlook and Technical Analysis The technical analysis suggests a bullish sentiment for Gold prices, with key indicators, including multiple Bull Crosses and the 14-day Relative Strength Index (RSI), pointing toward potential upward movement. In the event of a rebound, immediate resistance is expected at $1,993, with a subsequent test of the $2,000 threshold likely.
A breach above the multi-month high of $2,009 is deemed critical for a sustained uptrend towards the mid-May high of approximately $2,020. However, a failure to hold above the support levels at $1,970 and $1,963 could lead to a downside towards the psychological level of $1,950.
Investors are advised to closely monitor the US NFP data, as a weaker-than-expected report could trigger a surge in Gold prices, possibly propelling it past the crucial $2,000 mark, while a robust NFP data release could prompt a corrective move towards the $1,950 support level.