FX.co ★ XAU/USD, GOLD

Gold prices fell sharply by about 0.80% on Friday, posting a weekly decline of over 2%, after a much stronger-than-expected US jobs report triggered a sharp downward revision in market expectations. The robust jobs data provided a significant boost to the US dollar, fueling speculation in global financial markets that the Federal Reserve might resume its monetary tightening policy and consider raising interest rates, provided upcoming inflation data exceeds forecasts. At the time, gold prices hovered around $4,437 per ounce, under considerable downward pressure as market participants readjusted their macroeconomic expectations. The August non-farm payrolls report surpassed the consensus forecast of 56,000 jobs, rising to 162,000; the July figure was also revised sharply upward from -23,000 to +21,000 jobs. Meanwhile, the unemployment rate remained steady at 4.1%, providing Federal Reserve officials with practical evidence that the labor market is still resilient enough to withstand any potential monetary tightening without negative side effects. Against this strong economic backdrop, Federal Reserve Chairman Kevin Warsh recently made hawkish remarks. At the Jackson Hole symposium, he indicated that the labor market still meets the criteria for full employment and stated that curbing inflation is a top priority for the Fed. Meanwhile, Federal Reserve Governor Christopher Waller stated that the Fed would not rush to raise interest rates if inflation continues to decline, but that better-than-expected economic data could prompt a rate hike at the next Federal Open Market Committee meeting. As a result, the money market, as tracked by Prime Terminal, saw a significant shift, with traders now pricing in a 61% probability of a September rate hike, up from 54% the previous day.

The broader financial markets reacted swiftly to these developments. US Treasury yields, particularly the benchmark 10-year Treasury yield, initially surged to a record high of 4.81% before retreating and ultimately settling at around 4.768%. The dollar index followed suit, paring some of its gains during the day but remaining in positive territory, up 0.13% at 99.13, as investors awaited key inflation data. Currently, the market's focus has shifted entirely to next week's crucial economic data releases, including the Consumer Price Index (CPI), Producer Price Index (PPI), weekly initial jobless claims, the monthly US budget report, and the University of Michigan Consumer Sentiment Index. If these upcoming data releases show continued low inflation, the urgency for the Federal Reserve to raise interest rates may lessen, potentially offering a glimmer of hope to investors bullish on gold. Technically, gold is currently trading within a defined range between its 100- and 200-day moving averages. The support level lies near the 100-day moving average (around $4,354), while the resistance level is near the 200-day moving average (around $4,534). The Relative Strength Index (RSI) maintains a generally bullish structural pattern but has dipped slightly to near the neutral 50 level in the short term, suggesting a temporary dominance of selling momentum. For sellers to extend the downtrend, the gold/dollar pair (XAU/USD) needs to decisively break below $4,400, surpass the 100-day moving average, and then test the intraday low near $4,282. Conversely, for buyers to regain control and trigger an upward move, gold needs to break above the immediate resistance level at $4,450, surpass $4,500, and test the strong monthly high of $4,697 reached in August.