#Gold Technical Analysis# 24K99 News On Friday (September 6), spot gold maintained a strong trend and is currently trading around $2518 per ounce. Valeria Bednarik, Chief Analyst at FXStreet, wrote an article analyzing the technical prospects of gold.
Bednarik pointed out that the worsening weakness in the US labor market intensifies speculation about a larger rate cut by the Federal Reserve. Spot gold reached a high of $2523.45 per ounce on Thursday. Although the price has retreated from its high point, it is still holding above the $2500 per ounce level.
On Thursday, the weak US ADP employment data hit the US dollar, causing spot gold to close up $21.36, or 0.86%, at $2516.58 per ounce. The highest point during the day reached $2523.54 per ounce.
The 'small non-farm' ADP employment report released by the United States on Thursday showed that the number of private sector employees increased by 0.099 million in August after seasonal adjustments, reaching a new low since January 2021. It fell far short of the economists' expected 0.144 million and also fell short of the revised 0.111 million in July.
Investors will welcome the US August non-farm payrolls report at 20:30 Beijing time on Friday.
According to a survey by authoritative media, the seasonally adjusted non-farm payrolls in the US are expected to increase by 0.16 million in August, compared to an increase of 0.114 million in July.
Investors are also paying attention to the unemployment rate data. The survey shows that the US unemployment rate is expected to drop from 4.3% to 4.2% in August.
Han Tan, Chief Market Analyst at Exinity Group, stated: 'If the August unemployment rate remains unchanged at 4.3% (the highest level since 2021), with increased market bets on a substantial rate cut, gold prices will return to historical highs.'
Renowned Windsor Brokers analyst Slobodan Drvenica stated: "Gold's recent focus has shifted towards the upside, however, we need to see the outcome of Friday's non-farm payroll report to get a clearer signal. If the non-farm employment data disappoints, the gold price may once again test new historical highs."
FXEmpire analyst James Hyerczyk stated that if the non-farm payroll data is weaker than expected, this could increase the likelihood of the Fed cutting interest rates by 50 basis points in September, which could potentially boost the gold price.
Nick Timiraos, a reporter from The Wall Street Journal known as the "mouthpiece of the Fed," recently wrote that the US employment report for August to be released on Friday will play a larger role than usual in determining the extent of the Fed's interest rate cut this month. If hiring is weak or the unemployment rate rises, as it did in July, a larger rate cut will be imminent.
Short-term technical outlook for gold
Bednarik stated that from a technical perspective, the daily chart shows that gold found buyers near the bullish 20-day Simple Moving Average (SMA), which has stabilized and risen to near $2493.60 per ounce. At the same time, longer-term moving averages continue to rise well below the current gold price level. Finally, technical indicators remain in positive territory, but only the Relative Strength Index (RSI) has seen an increase, limiting the upside potential for gold price.
Bednarik added that in the short term, based on the 4-hour chart, although the momentum has weakened, the risk of gold price movement remains biased to the upside. Technical indicators have retreated from Thursday's highs but then stabilized within positive levels. Meanwhile, the 20-period SMA and 100-period SMA converge near $2498.00 per ounce, showing a mild upward trend. It is expected that the gold price will enter a consolidation phase before the release of the US non-farm payrolls report.
(Spot gold 4-hour chart source: FXStreet)
Bednarik gave the latest important support and resistance levels for the gold price:
Support levels: $2498.00 per ounce; $2489.60 per ounce; $2475.70 per ounce.
Resistance levels: $2519.75 per ounce; $2531.60 per ounce; $2545.00 per ounce.
At 12:08 Beijing time, the spot price of gold is $2518.17 per ounce.