Gold Rises Amid SVB Nervousness and NFP Data at 13:30 GMT

Gold (XAU/USD) Analysis

  • Gold whipsaws after hawkish Fed speak is undone by softer employment data
  • Outflows of physical gold in the world’s largest gold ETF spiked this week after Powell testimony
  • NFP data to reinject volatility into global markets and likely to guide price action into next week
  • The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library

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Gold Whipsaws after Hawkish Fed Speak is Undone by Softer Jobs Data

Gold remains 1% down for the week early in the European session but has recovered a sizeable portion of lost ground on the back of Jerome Powell’s hawkish testimony in front of the US Senate Banking Committee. Powell’s mention of a faster pace of rate hikes, should the totality of the data necessitate such action, saw gold sell-off around 2.5% as expectations around a possible 50 bps hike later this month rose.

Higher rates render the non-interest-bearing metal less attractive in the eyes of investors, which manifested in the largest year-to-date outflow of physical gold holdings in the world’s largest gold ETF (GLD).

Outflows from SPDR Gold Trust (GLD) YTD


Yesterday, however, gold prices began to rally after data revealed that the number of Americans filing for new unemployment benefits rose by the most in five months. The apparent easing in the labor market will be validated, or postponed to a later date, at 13:30 GMT today when the non-farm payroll data is released. Signs of job losses on the horizon will factor into Fed thinking in future meetings as a sign that the pace of future tightening may need to be revised lower. However, anything other than a drastically negative print, is unlikely to result in the Fed altering its hawkish stance.

Gold Technical Analysis and Levels of Interest Ahead of NFP

The weekly chart shows gold’s broader decline now that we are well into the new year. Last week’s price action provided a bullish impetus but this week’s contrasting catalysts (Powell testimony and softer employment data) ensured a choppier environment thus far. 1800 remains a key level of support while 1875 stands firm as a significant level of resistance which needs to be overcome before assessing the possibility of a return to the 2023 high.

Gold (XAU/USD) Weekly Chart


Source: TradingView, prepared by Richard Snow

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The daily chart reveals the choppy price action in more granular detail, trading lower from the weekly open and turning around well before the psychologically important 1800 level. Momentum appears in favour of the recent bullish spark with prices now testing 1833 – a level previously analysed as a gauge of both bearish and bullish continuations in the past. A daily and weekly close above 1833 bodes well for gold bulls going into next week. However, NFP has the potential to muddy the water here as the data print is often followed by a massive lift in volatility, offering little to no directional value. Gold bulls will be monitoring a possible negative surprise, which could see gold prices supported particularly as markets evaluate the possibility of contagion in the banking sector as SVB attempts to stave off a run on the bank.

Gold (XAU/USD) Daily Chart


Source: TradingView, prepared by Richard Snow


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— Written by Richard Snow for

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