US Jobs Data Will Determine Next Direction for Gold Amid Geopolitical Tensions Offer Support
The United States (US) Nonfarm Payrolls report tonight is expected to play an important role in determining the direction of gold prices.
Market players now expect a 34% chance that the Federal Reserve (Fed) will aggressively cut interest rates at the next FOMC meeting.
Gold is seen as still supported by rising geopolitical tensions between Iran and Israel, raising concerns about a potential wider conflict in the Middle East.
The widening risk of regional war has increased demand for value-protecting assets such as gold.
However, the real main focus is on the US employment data that will be announced tonight. The report is expected to show that the unemployment rate remains stable at 4.2%, while Nonfarm Payrolls are expected to increase by 150,000.
If the reading of the employment data report is stronger than expected, together with the report of wage inflation (Wages Inflation) increasing, new sentiment will be formed against a more controlled interest rate cut of 25 basis points by the Fed in November.
Therefore, the situation is able to strengthen the demand for the US dollar as well as put pressure on the price of gold.
But if otherwise, the sentiment of a larger and more aggressive rate cut will be revived, potentially weakening the dollar and pushing the price of gold towards the highest level.
Apart from tonight's labor market data, market players will also be closely monitoring New York Fed President John Williams' speech for more guidance on monetary policy.
His speech is expected to provide additional clues about the Fed's strategy on future interest rate adjustments, making it a key factor not only for gold but also for the broader market.
Technical Analysis: Daily Chart
Based on the daily chart, the price level of $2,670 is a critical level where it becomes the main factor for gold to rise higher.
If that level is successfully broken, the gold record high of $2,686 will be challenged and has the potential to push the price of gold to a new high around the $2,740 level.
But if otherwise, the price level of $2,633 will be the main support price. If the level is successfully broken, gold is expected to continue to be pressed at least to the level of $2,600 before the price level of $2,580 is tested.
