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As US NFP steals the spotlight, we expect the XAU/USD to drop to roughly $1,700 in the near future

Daniel Rogers

Aug 29, 2022 14:38

截屏2022-06-07 下午5.14.07.png 

 

After setting a new monthly low of $1,723.44 in the Tokyo session, the gold price (XAU/USD) is now indicating a less confident downward trend. The Federal Reserve (Fed) opted for price stability over growth on Friday at the Jackson Hole Economic Symposium, therefore the precious metal is projected to continue its downward trajectory for some time.

 

The Federal Reserve has little leeway to decrease the pace of its interest rate hikes in August due to signals of inflationary pressures. While economic activities in the United States showed significant slowing down because of decreasing liquidity in the economy. Market veterans anticipated that the Fed would slow the pace at which it was rising interest rates in light of the two factors. To counteract this, the Fed prioritized maintaining price stability.

 

The future of the United States hinges on the information provided by the Nonfarm Payrolls (NFP) report. We anticipate the economic statistics to come in at 290k, which is a decrease from the 528k reported in the previous release. The slowdown in job growth should not be seen as a huge concern by investors. Since the US economy has been at full employment for the past six months, much of the room for new jobs has been eliminated.

 

Gold prices have fallen below the 61.8% Fibonacci retracement level (set at $1,729.35 from the low of $1,680.91 on July 21 to the high of $1,807.93 on August 10) on an hourly time frame. Both the 20-period and the 50-period Exponential Moving Averages (EMAs) are trending downward, adding further filters to the downside at $1,738.08 and $1,745.84, respectively. The Relative Strength Index (RSI) (14) has moved into the negative zone of 20.00-40.00, indicating further declines ahead.