On Monday's session, we noted that last Friday's robust U.S. nonfarm payrolls report, combined with hawkish remarks from Federal Reserve officials, lifted the odds of a September rate hike to nearly 60%, pressuring gold prices. The short-term technical picture also suggested that after failing at resistance, bullion faced a risk of further declines. Accordingly, we advised monitoring resistance at $4,435 and $4,460, with support at $4,365 and $4,335. In subsequent trading, gold slipped to a low of $4,381 during European hours before finding a footing. After the U.S. market open, prices rebounded to $4,419, then held above $4,400 in a steady range. Early Tuesday, gold broke higher, climbing to $4,443 before retreating to $4,387, where it stabilized. The metal is currently trading near $4,398.
Overall, gold's downside has been limited, and its recovery momentum remains muted, leaving it in a choppy, weak consolidation phase. A Wolfinance analyst argues that while Friday's strong jobs data and hawkish Fed commentary pushed September hike probabilities to 60%, triggering an initial sharp drop, bullion clawed back most of its losses by the close. This week, the metal remains under pressure but has seen only modest declines. The key reason is that a single payrolls report is insufficient to drive aggressive positioning. Nonfarm payrolls are a lagging indicator, reflecting past economic conditions, whereas inflation is the core policy driver. The market is now focused on this week's U.S. CPI and PPI releases, which will directly shape future policy decisions. Ahead of those data, both bears and bulls are exercising caution, keeping gold's overall volatility subdued.
On the daily chart, gold has stalled after bouncing to a one-week high and is now consolidating weakly. To the downside, support is seen at last Friday's low of $4,365, which also aligns with the lower band of the 4-hour Bollinger Bands, followed by the weekly Bollinger middle band at $4,335. To the upside, resistance is at the 4-hour Bollinger middle band of $4,430, with further resistance at the daily Bollinger middle band of $4,470. The 5-day moving average shows a slight upward tilt despite a bearish crossover, while the MACD remains bearish, the KDJ indicator's bearish crossover is slowing, and the RSI is trending lower. Short-term technicals continue to favor the bears, implying a risk of further pullbacks.
For the day ahead, gold is being pressured by the strong payrolls data and hawkish Fed remarks, which have slightly raised September hike odds. However, the market's anticipation of U.S. CPI and PPI figures is curbing aggressive bets, thereby limiting the downside. Trading should adopt a range-bound approach, with resistance at $4,430 and $4,470, and support at $4,365 and $4,335.
The views expressed in this article are solely those of the author and do not constitute investment advice. Investors should operate at their own risk.
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