Gold price rises higher on soft US JOLTS data

• XAU/USD is up 0.05% at $2,493, with prices rebounding after touching a daily low of $2,471.
• The weaker-than-expected US JOLTS report is fueling speculation of a 50 bps Fed rate cut in September.
• Falling U.S. Treasury yields and a weaker U.S. dollar are supporting gold despite volatile gains throughout the session.

Gold prices targeted higher gains during the North American session after weaker-than-expected jobs data in the United States (U.S.) raised the odds for a 50 basis point (bps) rate cut ) by the Federal Reserve. Additionally, US Treasury bond yields fell and undercut the greenback, which is inversely correlated with the gold metal. Therefore, XAU/USD is trading at $2493, up by at least 0.05%.

Bullion prices were soaring throughout the day, mainly driven by traders’ booking profits, which pushed the gold metal to a daily low of $2,471. Gold has regained some ground of late as the US Bureau of Labor Statistics (BLS) released its latest Jobs and Turnover Survey (JOLTS) showing that vacancies fell to the most lowest level since January 2021.

U.S. Treasury yields fell in the wake of the data, as the yield on the benchmark 10-year note fell nearly six bps to 3.776%, as traders increased bets that the Fed could taper aggressive interest rates because of fears that they are behind the curve.

According to CME FedWatch Tool data, odds for a 50 bps at the September meeting rose to 43%, nearly a penny, as the next Federal Open Market Committee (FOMC) meeting is set for September 17-18.

The US Dollar Index (DXY), which tracks the performance of six currencies against the US dollar, fell 0.37% to 101.38 after recovering from a year-to-date (YTD) low and has risen nearly 1.30% in the last six days.

Market sentiment remains negative, blamed on stock rotation amid US recession fears. In the geopolitical sphere, the narrative remains slightly calm amid talks on a ceasefire in the Israel-Hamas conflict, while Russia’s invasion of the Ukraine conflict remains.

Meanwhile, gold traders are bracing for another round of US jobs data with ADP National Employment Change, Initial Jobs Claims and Nonfarm Payrolls (NFP).

Daily Market Reasons: Gold traders await busy US economic calendar

• The US BLS revealed that the number of job openings in July fell compared to the downwardly revised June data via the JOLTS report. Vacancies fell from 7.910 million to 7.673 million.
• In other data, Factory Orders for July beat estimates by 4.7%, rose sharply to 5% and crushed June’s -.3.3% contraction.
• US business activity in the manufacturing sector improved but remained in contraction territory.
• Private employment, revealed by the ADP National Employment Change report, is expected to increase from 122,000 in July to 150,000 in August.
• August NFP figures are expected to rise from 114K to 163K, while the unemployment rate could fall to a consensus estimate of 4.3% to 4.2%.
• The December 2024 Chicago Board of Trade (CBOT) fed funds rate futures contract indicates that investors are eyeing 106 basis points for Fed easing this year.

Technical Outlook: The price of gold is hovering around $2,500

Gold’s uptrend resumed on Wednesday as a “tweezer bottom” chart pattern emerges, however buyers need to clear a key resistance level that could sponsor a re-test of the YTD high. Momentum, as measured by the Relative Strength Index (RSI), suggests that buyers are in charge but have moved short-term.

If buyers get a daily close above $2,500, the next resistance would be the all-time high (ATH) at $2,531, followed by the $2,550 threshold. A violation of the latter will expose you to $2,600.

Conversely, if XAU/USD remains below $2,500, the next support would be the August 22 low at $2,470. With obstacles in place, the next area of ​​demand would be the confluence of the April 12 high support and the 50-day simple moving average (SMA) at around $2,431.