At the end of last week's trading, XAU/USD gold prices rebounded strongly, taking advantage of the decline in the price of the US dollar. The price of the yellow metal jumped towards the resistance level of $ 1682 an ounce, rebounding from the support level of $ 1616 an ounce ahead of the US data. Its gains were supported by a quiet trend in the US labor market. Despite a better-than-expected US jobs reading in October, investors were enthusiastic about the downside in employment gains as it may prompt the Federal Reserve to ease its tightening in its hawkish campaign to break record inflation.
After strong gains, XAU/USD gold prices recorded a weekly increase of about 1.25%, reducing its decline since the start of the year 2022 to date to less than 9%. The recent gains moved some technical indicators towards overbought levels, so do not be surprised that the price of gold is exposed to profit-taking operations. In the same way, the price of silver, the sister commodity to gold, rose to its highest level in three weeks, surpassing the top of $20. Accordingly, the price of the white metal enjoyed weekly gains of approximately 7%, reducing its loss in 2022 to about 12%.
According to official figures, the US economy added a total of 261,000 new jobs, stronger than expected in October, higher than the market estimate of 200,000 jobs. The country's unemployment rate rose to 3.7% from 3.5% in September. The labor force participation rate decreased to 62.2%, the average weekly working hours declined to 4.7% year on year, and the average weekly hours did not change at 34.5. Employment gains were broad-based, led by healthcare (53,000), professional and technical services (43,000), leisure and hospitality (35,000), manufacturing (32,000), and government (28,000).
For his part, Federal Reserve Chairman Jerome Powell highlighted the strength of the US labor market, making it difficult to curb rampant price inflation. But should the US labor market calm down further as 2023 approaches, could this force the Eccles Building to pause when interest rates are raised? Powell believes it is "too early" to consider this idea.
Gold Prices are Sensitive
Meanwhile, the US Treasury market was mixed, with the benchmark 10-year bond yield rising 1.1 basis points to 4.135%. Yields on one-year notes jumped one basis point to 4.788%, while yields on 30-year notes rose 5.5 basis points. The price of gold is generally considered sensitive to a high interest rate environment because it raises the opportunity cost of holding non-yielding bullion. Another factor affecting the gold market. The US Dollar Index (DXY), a measure of the US currency against a basket of major currencies, fell 1.09% to 111.70, from an opening at 112.93. However, the dollar is heading for a weekly gain of about 0.8%. A weak US dollar is a good thing for dollar-denominated commodities as it makes them cheaper to buy for foreign investors.
In other metals markets, copper futures rose to $3.6545 a pound. Platinum futures rose to $950.60 an ounce. Palladium futures advanced to $1,891.00 an ounce.
Technical Forecast for the XAU/USD Gold Price Today:
- The XAU/USD gold price crossed the resistance levels of 1660 and 1685 dollars that supports the domination of the bulls.
- Control needs to test the psychological top of 1700 dollars an ounce to confirm the shift higher.
- The recent rebound gains have moved some technical indicators towards overbought levels, and if the metal does not gain momentum, the gold market may be exposed to profit-taking operations at any time.
- The trading week is no less important than the last week, so be careful.
To turn the general trend of gold to the downside, prices must return to the vicinity of the support levels of 1655 and 1638 dollars, respectively. The recent performance confirms the importance of the trading strategy that we always recommend which is to buy gold from every bearish level.
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