- The price of gold held steady, as mounting concerns about a worsening energy crisis in Europe drove investors to the US currency over the euro.
- Bullion prices rose on Friday to pare the third consecutive weekly decline after the US jobs report showed that employers added a healthy number of jobs in August.
- In addition, the continued influx of people entering the labor market pushed up the unemployment rate.
- This suggested some easing in a tight labor market and provided mixed implications for the Fed's monetary tightening trajectory.
Gold Prices Stable
Since the beginning of the week's trading, the price of gold XAU/USD has been stable in a narrow range between the level of 1707 dollars and the level of 1716 dollars for an ounce.
In general, global central banks are set to continue raising interest rates to fight inflation, which is putting its weight on non-yielding assets such as gold. There are growing expectations that the European Central Bank will rise by 75 basis points as soon as Thursday, but the decision remains challenging as President Christine Lagarde and her colleagues manage the twin problems of rising price pressures and an impending recession.
Europe's energy crisis is deepening as Gazprom SA last week again halted the main gas pipeline indefinitely after G7 leaders agreed to cap Russian oil prices as the Kremlin continues its war in Ukraine. Germany - the country worst affected by the Nord Stream pipeline cut - unveiled a $65 billion package to protect consumers.
On Friday, European ministers will discuss special measures to rein in rising energy costs, from capping gas prices to suspending the trading of energy derivatives.
The dollar jumped as commodity-linked currencies joined the euro's slide to a two-decade low. The price of oil rose before the OPEC + meeting on supplies. Treasury cash and US stocks are closed for Labor Day. Russia's Gazprom last week again halted the main European gas pipeline indefinitely after the leaders of the Group of Seven agreed to impose a ceiling on the price of Russian oil as the Kremlin continues its war in Ukraine. The price of natural gas has risen by more than 30% in Europe and countries there can take special steps to curb energy costs.
Uncertainty in the Markets
Markets are also facing more uncertainty from the US-China tension. The Biden administration is considering steps to curb US investment in Chinese technology companies and will allow Trump-era import tariffs to continue while the tariffs are reviewed. Separately, China has expanded its lockdown in areas of the megacity Chengdu and ordered more mass testing there as it tries to contain the Covid outbreak. In the UK, Conservative Party members are expected to name Liz Truss as their leader, paving her way to becoming prime minister. Its plan to "turbocharge" the economy by cutting taxes is already worrying investors amid double-digit inflation.
Today's XAU/USD Gold Price Forecast:
The general trend for gold is still bearish and attempts to rebound to the top are still weak and need strong stimulus. In case the prices move towards the resistance levels of 1735 and 1760 dollars respectively, the bulls will have ammo to launch strongly higher. So far, approaching the support of 1700 dollars per ounce supports the bears, and penetrating below it will push the gold price to stronger support levels, and the closest to them are currently 1685 and 1660 dollars. These are strong levels to think about buying gold again. I still prefer buying gold from every bearish level.
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