Analysis Of XAU/USD Pair: Non-farm Payrolls Could "Reverse" Gold's Trend

By RoboForex Analytical Department

ADP's preliminary data on newly created non-agricultural employment in the US fell significantly short of analysts’ expectations. Today, official data on this indicator and unemployment statistics will be published. It is probable that the data will be worse than analysts' expectations. In such a scenario, the US Federal Reserve's plans to raise the benchmark interest rate may be questioned. This was a primary reason for the fall in the price of gold, which was losing out in competition with US government bonds, which have updated their yield records since the 2008 crisis. Additionally, budget issues linger as only a temporary document has been adopted. This inevitably leads to growing investor anxiety and increasing demand for gold as a safe-haven asset.

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Technical Analysis Of The XAU/USD Currency Pair

D1 Timeframe: In the XAU/USD pair, the resistance level remains at 1929.14, and support has not been formed for 9 days, marking an extended cycle of relentless decline. Eventually, significant sellers will lock in their profits, leading to an increase in long-position volumes

H1 Timeframe: Speculative purchases are relevant within a temporary correction from 1827.74 with a 1857 target. A local support level was formed at 1815.57. Considering the ongoing downward trend, short positions along the trend are unlikely. Sales may not be considered until a rebound from 1855 after corrective growth

Scenario Insights

Bullish scenario: If the nonfarm payroll and unemployment data are disappointing, this could instigate a bullish reversal for gold as investors may seek refuge in the safe-haven asset amid scepticism towards the Fed's ability to hike rate.

Bearish scenario: Conversely, if employment data outperform expectations, this could lend further support to the USD and potentially prompt a continuation of the bearish trend for gold, albeit perhaps at a moderated pace given the extended decline without a pullback

Risk And Trading Strategy

Intriguingly, the technical analysis hints at potential speculative buys on H1, suggesting that traders might seek short-term opportunities to capitalise on interim upward movements in a broader bearish context. However, the D1 timeframe suggests a longer-term bearish view.

Navigating these dual perspectives requires a strategic approach to risk management, particularly with high-impact news on the horizon. Ensure that any long or short trades are made with a clear exit strategy, with stop-loss and take-profit levels carefully calculated to safeguard your trading capital.

In a high-stakes market environment punctuated by impactful economic data releases, maintaining a solid grasp on technical and fundamental analysis and ensuring a coherent, risk-mitigated trading strategy is paramount. Always trade with caution and adhere to your risk tolerance limits.

Disclaimer

Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.