Gold Price Projection: Robust US ISM PMIs Restrained the XAU/USD Rally.

gold price update
  • XAU/USD climbed to a peak of $1,952 for the day, only to face resistance from the 100-day SMA, subsequently pulling back to $1,940.
  • Initially, US yields dipped following mixed US NPFs but rebounded thanks to robust US ISMs data from August.
gold price update

By week’s end, the Gold spot price (XAU/USD) relinquished its daily gains, retreating toward the $1,940 territory. Initially retreating, US yields saw a recovery during the American session, although the precious metal is still on track to close the week with a gain of over 1%.

The much-anticipated US Nonfarm Payrolls report for August delivered mixed results. On a positive note, the headline NFPs surged to 187,000, surpassing both the expected 170,000 and the previous 157,000 figures. However, Average Hourly Earnings disappointed, showing a 0.2% month-on-month increase compared to the expected 0.3%. Additionally, the unemployment rate in the same month rose to 3.8%, defying all forecasts.

In terms of economic activity, the Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) data from the United States for August exceeded expectations, with an actual figure of 47.6, surpassing the anticipated 47 and improving upon the previous 46.4.

Read further: What is GOLD (XAUUSD)

US bond yields, often seen as the cost of holding gold, experienced volatility in response to the employment and economic activity figures. The 2-year yield dipped to a three-week low around the 4.76% mark before settling at 4.85%. Similarly, the 5 and 10-year yields reached their lowest levels since August 10, stabilizing at 4.27% and 4.15%, respectively. Concerning future Federal Reserve (Fed) expectations, market confidence in an additional rate hike in 2023 waned. According to the CME FedWatch tool, investors remain convinced that the Fed will not raise rates in the September meeting, with the odds of a hike in November and December dropping to nearly 35%.

Key Levels to Monitor for XAU/USD

Based on the daily chart analysis, the technical outlook for XAU/USD appears somewhat neutral to bearish as indications of bullish exhaustion become evident. The Relative Strength Index (RSI) is displaying a declining trendline above its midpoint, while the Moving Average Convergence Divergence (MACD) is revealing diminishing green bars. The RSI, with its downward trajectory below the midpoint, implies a bearish sentiment, while the MACD shows weakening bullish momentum. Conversely, the pair is trading below the 100-day Simple Moving Averages (SMAs) but remains above the 20 and 200-day averages, indicating that buyers may still have some strength remaining.

Key Support Levels: $1,930, $1,915 (confluence of the 20 and 200-day SMAs), $1,900.

Key Resistance Levels: $1,950 (100-day SMA), $1,970, $2,000.

XAU/USD Daily Chart

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