Gold Price Forecast: XAU Gears Up for NFP, Can Bulls Bid the Break?
Gold Talking Points:
- Last Wednesday and Thursday brought a strong bid to Gold, with prices pulling back on Friday.
- The FOMC rate decision last week showed a Fed that seems much more concerned with employment than inflation, and Friday of this week brings on NFP.
- The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
US monetary policy remains in question, with many looking for a signal of when that first move away from pandemic-era policy might show up. Each FOMC rate decision sees journalists parse through the specific wording from Chair Powell in the effort of finding some sign of an impending move. But, to date, nothing has really shown. Inflation remains well elevated above the Fed’s 2% target but as they’ve told us countless times so far, they believe that’s transitory and will take care of itself. Employment, on the other hand, remains well below pre-pandemic levels and this remains the large piece that requires ‘significant further progress’ for the Fed to start looking at a policy shift.
This comes into the spotlight this week with the release of July Non-farm Payroll numbers on Friday.
In Gold, there’s potential for a bullish breakout, as I had looked at last week. The month of June was a rough outing for Gold but July saw 50% of that move retraced. After last week’s FOMC rate decision, bulls bid prices right back into that resistance zone, highlighting how a dovish Fed can continue to push the long side of Gold prices.
The big question now is whether the Fed will get that ammunition to stay dovish, and the Friday jobs report will be key as this is the last NFP report ahead of the Jackson Hole Economic Symposium later this month. A miss on the headline number and/or a rise in the unemployment rate could be seen as a dovish signal, leading to strength in metals and possibly even another move of weakness in the US Dollar.
Gold Four-Hour Price Chart
--- Written by James Stanley, Senior Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.