XAU/USD, the trading symbol for gold priced in US dollars, is starting to catch quite a bit of upward momentum. It is getting very close to key resistance levels. It’s now exchanging hands at around $3,340 to $3,350 area. With bullish technical signals it appears primed to continue its rally. US market analysts are preparing for a flood of new economic data. Among these, the Nonfarm Payroll report, in particular, is likely to have a strong impact on gold prices.
The closest resistance levels for XAU/USD are at $3,350.00, $3,373.50, and $3,389.40. The Fibonacci resistance level at $3,373.50 is the next gold price target. This level will have a huge influence on trading action in the days to come. The 50% Fibonacci retracement from the June slide is at $3,350. This price level will be key in deciding whether or not XAU/USD is able to continue its bullish trend.
Technical analysis shows that quite a few bullish indicators on overall economic performance of XAU/USD. The 20-day Simple Moving Average (SMA), which smooths out price fluctuations and helps traders identify trends, has crossed positive underneath the present price indicating bullish sentiment among traders. As you can see from the 100 and 200 SMAs, they have a very strong bullish slope. This further cements the view that XAU/USD is on a strong upward path.
XAU/USD has strong support at $3,325.00, $3,311.90 and $3,295.45. These new levels act as a buffer for price action if it meets resistance at higher levels. The 200 SMA offers key intraday support. Other investors do as well, because they can count on it being an investor safety net.
Perhaps the biggest factor playing into these massive movements and volatility are the expectations market participants have for key economic readings out of the United States. Everyone’s looking ahead to Thursday’s Nonfarm Payroll report. Economists forecast the US economy created 110,000 net new jobs in June. This is especially positive when compared to the May Nonfarm Payroll reading which was revised downward to 29,000 from the originally reported 37,000. This change is likely to deepen fears about the strength of the labor market and its potential impact on aggregate economic conditions.
Further, unemployment is expected to increase to 4.3%, an increase from 4.2% as measured in May. These numbers have the potential to incite even more turbulence in financial markets. This even extends to gold price like markets because they are an indication of the overall economic wellbeing and consumer profitability.
XAU/USD is now trading between $3340-$3350. With plenty of positive technical signals suggesting gold is primed for further upside movement, traders are hopeful that gold has only begun to attract interest as a safe-haven asset amid uncertainty. Market sentiment and growth-linked economic fundamentals will be key to whether gold can sustain its progress. How will gold fare when the bulls or bears cling to their competing paradigms?
We encourage investors to monitor these economic policies and their implementations closely as they progress. That Nonfarm Payroll report will tell us a lot, as in, what portions of the economy are creating new jobs. It will guide Federal Reserve monetary policy decisions that have direct bearings on precious metals like gold.