Market Analysis

Gold Price Gathers Strength, Eyes Fresh Two-Week High Ahead of US NFP Data

Amos Simanungkalit · 07 Jun 2024104.2K Views

Gold price (XAU/USD) extends its rally, reaching fresh two-week highs during early European trading hours on Friday. Investors are now waiting for the release of the highly anticipated monthly employment data from the United States (US). The Nonfarm Payrolls (NFP) report, known for its market impact, will significantly influence the Federal Reserve's (Fed) future policy decisions, potentially providing new momentum for the non-yielding yellow metal.

As the key data release approaches, increasing speculation about an imminent interest rate cut by the Fed in September, fueled by recent softer US macroeconomic data, may continue to support the Gold price. Additionally, dovish expectations for the Fed are keeping US Treasury bond yields and the US Dollar (USD) near multi-week lows, which should help limit any downside for the commodity. Furthermore, ongoing geopolitical tensions in the Middle East suggest that the path of least resistance for XAU/USD is upwards.

Technical Analysis: Gold price likely to face significant resistance near the $2,400 mark

From a technical perspective, Thursday’s sustained move beyond the $2,364 area, last week's swing high, has provided a fresh trigger for bullish traders. However, mixed oscillators on the daily chart suggest caution before expecting further gains. Therefore, any subsequent upward movement is likely to face strong resistance near the $2,400 mark. If buying momentum continues, the Gold price could rise to the next key hurdle near the $2,425 zone, potentially reaching the $2,450 region, which is the all-time high touched in May.

On the downside, the $2,060 horizontal zone is expected to provide immediate support. Any further decline might present a buying opportunity around the $2,340 region. This should help limit the downside for Gold near the $2,315-2,314 area, or the multi-week low touched on Tuesday. A decisive break below this level would confirm a breakdown through the 50-day Simple Moving Average (SMA), paving the way for deeper losses. The XAU/USD could then weaken further below the $2,300 mark and test the $2,280 support zone.