Gold price extends price consolidation move above $2,500, bullish trend remains

• The price of gold remains limited in a known range since the beginning of the current week.
• A positive risk tone limits upside, although a mix of factors continues to provide support.
• Fed rate cut bets, along with geopolitical risks, should help limit any significant corrective slide.

The price of gold (XAU/USD) is holding steady above the psychological $2,500 level during the Asian session on Thursday and remains close to the all-time high reached earlier this week. Data released Wednesday showed that U.S. job growth in the year to March was significantly weaker than initially estimated. In addition, the minutes of the July FOMC meeting showed that several officials were leaning toward an immediate interest rate cut. That reaffirmed bets for an imminent start to the Fed’s policy easing cycle in September, which knocked the US dollar (USD) to a fresh YTD low on Wednesday and continues to act as a tailwind for the non-yielding yellow metal.

Investors, however, are looking for more clarity on whether the not-so-strong U.S. labor market warrants a bigger interest rate cut next month. This puts more weight on Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium, which will play a key role in influencing USD price dynamics in the short term and provide a new directional boost to the gold price. Meanwhile, the prevailing risk environment is capping XAU/USD, although the lack of progress on a ceasefire deal between Israel and Hamas should help limit downside. Traders are now looking at flash global PMIs, which, along with US macro data, could produce near-term opportunities.

Daily Digest Market Movers: Gold price undermined by bullish market mood, favorable Fed outlook to limit downside

• The US dollar fell to a fresh YTD low on Wednesday in reaction to data indicating that the labor market was not as strong as expected and helped the price of gold reverse an intraday slide to levels below $2,500.
• The preliminary annual analysis of employment data released by the US Bureau of Labor Statistics showed that US employers added 818,000 fewer jobs than reported in the year to March.
• Additionally, the minutes of the July 30-31 FOMC meeting revealed that the vast majority of officials supported the case for a rate cut in September, while some policymakers were leaning toward immediate action.
• Markets are now pricing in a 38% probability of a 50 basis point rate cut next month, up from 29% a day earlier, and a cut of around 100 bps by the end of this year, supporting the metal without yield.
• Meanwhile, a ceasefire deal between Israel and Hamas still appears elusive, which keeps the risk of a wider Middle East conflict on the table and is proving to be another factor lending support to XAU/USD.
• Traders are now looking forward to the US economic file – which includes the release of initial weekly jobless claims and existing home sales data – for near-term opportunities later in the North American session.
• However, market focus will remain on Fed Chairman Jerome Powell’s speech on Friday to see if significantly weaker-than-expected US job growth warrants a bigger rate cut in September.

Technical analysis: Gold price could continue to attract buyers on the downside, return to $2,480 key for bullish traders

From a technical perspective, the range-bound price action seen earlier this week could be classified as a bullish consolidation phase ahead of the next leg. Furthermore, the oscillators on the daily chart remain in positive territory and are still far from overbought, validating the near-term constructive outlook. Therefore, a move back to the retest of the all-time high around the $2,531-$2,532 area reached on Tuesday seems a distinct possibility. Some further buying will reaffirm be seen as a new trigger for the bulls and pave the way for an extension of the recently well-established uptrend.

On the other hand, any significant pullback could continue to attract some buyers near the $2,500 round figure. This should help the gold price downside near the $2,480 resistance threshold point. A convincing break below the latter could trigger some technical selling and pull XAU/USD towards the $2,455-$2,453 horizontal support en route to the $2,430 region. The corrective slide could extend further towards the 50-day simple moving average (SMA), currently pegged near the $2,400 mark.