XAU/USD Gold Price Analysis Today: Gold Holds Strong Against Dollar Strength

The gains of the US dollar halted after data showed a less-than-expected increase in private sector employment in the United States. Thus, this data boosting optimism that the Federal Reserve would begin cutting interest rates sometime early next year. Recently, this allowed the gold price (XAU/USD) to stabilize around the $2035 resistance level. Currently, Gold prices faced profit-taking selloffs after testing their all-time high at the beginning of the week when they jumped above the $2135 resistance level per ounce.

 

Will the price of gold decrease in the coming days?

In this regard, Craig Erlam, Senior Market Analyst at OANDA, states, "It seems that gold traders are waiting for key events during the week, which include the U.S. jobs report on Friday, U.S. inflation on the following Tuesday, and the Federal Reserve's decision on U.S. interest rates on the following Wednesday."

Meanwhile, the price of gold (XAU/USD) will be influenced in the coming days by the U.S. dollar exchange rate and the future tightening policies of global central banks. Especially, the U.S. Federal Reserve, depending on investors' risk aversion amid increasing global geopolitical tensions. Particularly, in the Middle East, which is currently a focal point in global events.

On the economic side, a report from the ADP payroll processor showed that private-sector employment in the United States rose less than expected in November. Recently, it was increased by 103,000 jobs after a downwardly revised gain of 106,000 jobs in October. However, Economists had expected private payrolls to increase by 130,000 compared to an initially reported gain of 113,000 in the previous month. Thus, the weaker-than-expected growth in private-sector jobs added to recent optimism that the Federal Reserve has finished raising interest rates.

On the other hand, government bond yields in the euro zone reached their lowest levels in several months after European Central Bank official Isabel Schnabel told Reuters that further interest rate hikes were “somewhat unlikely.” Accordingly, the yield on 10-year German government bonds, the benchmark index for the euro area, fell by 0.5 basis points to 2.23 percent, reaching a new lowest level in 7 months.

Another market-influencing factor is the upcoming release of the U.S. monthly jobs report by the U.S. Department of Labor on Friday, which is closely monitored and could have a significant impact on interest rate expectations. Currently, economists expect an increase in U.S. employment of 185,000 jobs in November, following an increase of 150,000 jobs in October. Finally, the unemployment rate is expected to remain at 3.9%.

 

Gold Price Forecast and Analysis Today:

Despite the recent selling activities, the overall trend for the price of gold (XAU/USD) remains bullish, and stability around the psychological resistance of $2000 per ounce continues to support the dominance of the bulls. Concurrently, the performance may stay within its current range until the reaction to the important announcement of U.S. job figures tomorrow. Meanwhile, this announcement is expected to have a direct and strong impact on the future policy of the U.S. central bank and, consequently, on the dollar and gold prices.

On the other hand, the positive job figures exceeding expectations may allow the bears to push the price of gold (XAU/USD) towards stronger support levels, currently at $2000 and $1985, respectively. As mentioned before, the latter level reinforces the bears' control over the trend.

Furthermore, if U.S. job figures come in below expectations and negatively affect the outlook for the tightening of the U.S. central bank's policy. Thus, gold bulls may find an opportunity to return to the vicinity of resistance levels at $2055 and $2070 per ounce once again.

(Click on image to enlarge)

XAU/USD (Daily Chart)


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