As the financial world anticipates significant employment data releases, spot gold (XAU/USD) demonstrates a soft tone in the American session on Monday. The XAU/USD currency pair, which recently hit a high of $4,219 per troy ounce now trades around the $4,190 level. Investors are particularly focused on upcoming reports from the U.S. Department of Labor that could impact gold prices in the near term.
Close behind on Tuesday will be the U.S.’s ADP 4-week Employment Change report. We’ll get the release of their Job Openings and Labor Turnover Survey (JOLTS) report. The ADP report is an important official view into employment trends. Market watchers pay particular attention to the 4-week average Employment Change, viewing it as an indicator of future trends in labor data overall. The Bureau of Labor Statistics (BLS) will follow with the JOLTS reports for September and October, which are expected to shed light on job openings and labor market dynamics.
Though lower on the day amidst ongoing volatility, XAU/USD has been holding above each of its moving averages, a very bullish technical sign. The 20-day Simple Moving Average (SMA) currently is flying high above the 100- and 200-day SMAs. This exceptional performance paves the way for a bullish outlook on short-term gold prices. Currently, the 20-day SMA is at $3,784.84 and the 100-day SMA is at $3,784.84.
The 20-day SMA is now forming short-term resistance at $4,206.92. Traders will want to keep a very close eye on this important area in the days ahead. Momentum indicators reveal a different story. The Momentum indicator has crossed below zero and continues to fall. At the same time, the RSI (Relative Strength Index) has been fluctuating near the 44 level. This shows that although there is still plenty of bullish optimism, momentum has slowed considerably from the recently peaked levels, foreshadowing market weakness.
The hopeful market sentiment is even further clouded by preparedness and positions laid out in recent testimony by Fed Chairman Jerome Powell. He cautioned against reading too much into a possible interest rate cut in December. Compounding matters, ongoing economic uncertainties render any projections even more tenuous. These kinds of declarations tend to drive investor action, especially in commodities markets like gold that act as safe havens in times of turmoil.