Gold prices surged on Friday following remarks by Fed Chair Powell, hinting at possible interest rate adjustments as policy is in restrictive territory. This led to elevated expectations for interest rate cuts in September, with two cuts projected by the end of the year. Market attention is now on the upcoming US Non-Farm Payroll (NFP) report, which is expected to significantly influence interest rate forecasts.<\/p>\n
Positive NFP data could increase the likelihood of no September rate cut, affecting gold negatively, while poor data might boost expectations for further rate cuts and give gold prices a lift. Although real yields are anticipated to decline with Fed easing, short-term interest rate reassessments may lead to corrections in gold’s upward trend.<\/p>\n
In the daily gold chart, prices are oscillating between 3,438 resistance and 3,245 support. The market remains range-bound until a definitive breakout occurs.<\/p>\n
On the 4-hour chart, gold experienced a rally followed by a pullback to 3,350, with buyers likely stepping in to target the resistance. A further decline may prompt sellers to aim for the 3,245 support.<\/p>\n
Today’s focus is on the US Consumer Confidence report, with US Jobless Claims on Thursday and the US PCE price index on Friday as upcoming economic indicators.<\/p>\n
The recent dovish tilt from the Federal Reserve has shifted the landscape, making us believe rate cuts are coming this year. The market is now pricing in a high probability of a September cut, especially after July’s Core PCE data came in at a manageable 2.7%. This puts all eyes on the upcoming labour market data for direction.<\/p>\n
For derivative traders, the US Non-Farm Payrolls (NFP) report next week is the main event. It will be the deciding factor for the Fed’s next move and will dictate gold’s short-term path. We need to be prepared for two very different outcomes.<\/p>\n
If the jobs data comes in strong, say above 200,000, expectations for a September cut will diminish and weigh on gold. In this scenario, traders might consider buying puts on gold futures or ETFs to hedge against or profit from a drop towards the 3,245 support level. A strong report would challenge the current dovish narrative.<\/p>\n
Conversely, a soft report below 150,000 jobs will fuel bets on more aggressive rate cuts, potentially even three by year-end. This would likely send gold surging, making call options an attractive strategy to capture the upside potential towards the 3,438 resistance. Such a number would confirm the economy is slowing enough for the Fed to act decisively.<\/p>\n
We saw the opposite of this play out during the aggressive rate hiking cycle of 2022-2023, where stubbornly strong labour data kept real yields high and put consistent pressure on gold prices. Now, with the Fed in an easing mode, falling real yields should provide a long-term tailwind for gold. The short-term, however, will be choppy and driven by data surprises.<\/p>\n
Technically, gold is trading in a defined range between 3,438 resistance and 3,245 support. Before the NFP release, traders might look at volatility plays, such as buying straddles, to profit from a breakout in either direction. Until that breakout happens, the price action is likely to remain contained.<\/p>\n
On a shorter timeframe, the 3,350 level is acting as a key pivot point. Should we see a dip towards this level in the coming days, it could present an opportunity for tactical traders to buy short-dated call options, anticipating a bounce. However, a firm break below this level would signal weakness and open the door for a move down to the primary 3,245 support.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Gold surges on Fed remarks; market awaits key US data to shape rate cut and price direction.<\/p>\n","protected":false},"author":62,"featured_media":16980,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-29617","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/29617","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=29617"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/29617\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16980"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=29617"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=29617"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=29617"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}