Gold (XAU/USD) price dives over 0.40% on Monday following last Friday’s US jobs report, which ignited speculation that the Federal Reserve (Fed) might resume its tightening cycle if inflation reaccelerates late this week, while the labor market remains solid. The XAU/USD pair trades at $4,412 after reaching a daily high of $4,435.
XAU/USD falls as strong payrolls put inflation data center stage
The US Nonfarm Payrolls exceeded forecasts on Friday. August’s employment smashed forecasts of 56K, coming in at 162K, while July’s print was upwardly revised from -23K to 21K. The same data showed that the Unemployment Rate was steady at 4.1%.
Following the report, US Treasury yields rose, pushing the US Dollar higher. The US Dollar Index (DXY), which measures the performance of the Greenback versus a basket of six currencies, is down 0.25% at 98.91.
The reaction was sparked by money markets raising the odds of a Federal Reserve interest rate hike at the September 15-16 meeting to 60%, as reported by Prime Terminal.
On Thursday, traders will eye the release of US producer-side data, followed by the Consumer Price Index (CPI) on Friday.
On Saturday, the US conducted strikes on three Iranian tankers in response to the IRGC's ballistic missile attack on US Navy ships. Iran’s navy stated it targeted oil vessels moving through unauthorized routes in the Strait, along with three other US-flagged ships elsewhere.
Meanwhile, US President Donald Trump began to exert pressure on Washington’s Fed, saying that unless the Fed cut interest rates, something that he demanded previously, he would stop trading with countries with which the US has a deficit.
This week, the US economic schedule will feature the release of the Producer Price Index (PPI), the Consumer Price Index (CPI), jobless claims data, the US Monthly Budget Statement, and the University of Michigan Consumer Sentiment for September.
XAU/USD technical outlook: Gold trapped within 100- and 200-day SMAs
Gold price has reversed course, though price action shifted more narrowly due to thin volume. As of writing, the yellow metal found support at the 100-day Simple Moving Average (SMA) at $4,350, followed by the $4,500 level above.
The Relative Strength Index (RSI) is neutral to downward-trending, hinting that, in the near term, a leg down is on the cards.
Downwards, the first support is seen at $4,400. A decisive breakout will expose the 100-day SMA, with the next support at $4,300 and the September 2 swing low of $4,282.
On the upside, XAU/USD's next area of interest past $4,500 is the 200-day SMA at $4,535. A breach of the latter will expose $4,600, followed by the August 25 daily high at $4,697.
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