Gold Prices Take a Beating, but More Damage Might Come from the US Jobs Report

XAU/USD Daily Chart

Gold, XAU/USD, Non-Farm Payrolls (NFPs), Technical Analysis, IG Client Sentiment – Briefing:

  • Gold prices extend losing streak amid a strong US Dollar
  • All eyes are now on US non-farm payrolls report Friday
  • A tight labor market and a hawkish Fed bodes ill for gold

Gold prices softened over the past 24 hours, with XAU/USD touching its lowest since July. The anti-fiat yellow metal inversely tracked a stronger US Dollar as the 2-year Treasury yield closed at a new high for this year. Global monetary tightening is weighing against gold, especially from what is coming out of the United States.

Traders spent most of August reversing expectations of a pivot from the Federal Reserve in 2023. This brought up government bond yields and the US Dollar. Now, all eyes are turning to the next jobs report from the world’s largest economy over the remaining 24 hours. Non-farm payrolls are seen rising almost 300k in August, which is much smaller than the 528k print in July.

Still, economists’ forecasts continue to hint at a tight labor market in the US. The unemployment rate is seen holding at 3.5%, with the labor force participation rate rising to 62.2% from 62.1%. Job openings totaled about 11.2 million in July, far above pre-pandemic levels. Another round of solid jobs data would likely continue underpinning a hawkish Fed, further denting the yellow metal.

Gold Technical Analysis

After persistent losses since early August, gold is now at critical support levels. These include the July low (1681) and the 2021 bottom (1676). Breaking lower exposes the 78.6% Fibonacci extension at 1651 before the 100% level comes into play at 1609. Otherwise, a turn higher would place the focus on the 20-day Simple Moving Average (SMA) before the key falling trendline from March nears.

XAU/USD Daily Chart

Chart Created Using TradingView

Gold Sentiment Outlook – Bearish

The IG Client Sentiment (IGCS) gauge shows that roughly 84% of retail traders are net-long gold. IGCS tends to function as a contrarian indicator. Since most traders are bullish, this hints that prices may continue falling. Upside exposure has increased by 5.11% and 6.9% compared to yesterday and last week respectively. The combination of current and overall changes in sentiment offers a stronger bearish-contrarian trading bias.

Gold Sentiment Outlook - Bearish

— Written by Daniel Dubrovsky, Strategist for

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

*IG Client Sentiment Charts and Positioning Data Used from September 1st report

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