Key points:
Gold prices remained largely flat on Thursday, reflecting investor caution ahead of the U.S. nonfarm payrolls report. This data could signal future rate moves by the Federal Reserve, particularly with market attention focused on whether a rate cut will materialise at the next policy meeting.
Spot gold held its ground at $2,494.54 per ounce by 0054 GMT, while U.S. gold futures stayed mostly unchanged at $2,524.50 per ounce. Investors remain cautious in the absence of strong indicators to drive the market in either direction.
Gold traditionally shines during low-interest-rate environments and is often viewed as a reliable hedge against economic and political turmoil. The current market environment is influenced by a mix of economic uncertainties, driven by weakening labour data and potential rate cuts.
See: Gold plunges as seen on the VT Markets app.
The XAU/USD pair has been hovering in a narrow range as traders await key economic data from the U.S. to provide more direction. Gold closed at $2,498.59 after reaching a high of $2,499.35 and a low of $2,494.54. The MACD histogram shows neutral to weak bullish momentum, with the MACD and signal lines near equilibrium, while the 5, 10, and 30-period moving averages display a sideways pattern, indicating consolidation in the price action.
The recent labour market data, which showed a decline in U.S. job openings, points to a cooling job market. This data is unlikely to spur the Federal Reserve into taking more aggressive measures, but it has certainly shifted expectations.
Currently, the market is pricing in a 44% chance of a 50-basis-point cut at the next Fed meeting, though much depends on the upcoming U.S. nonfarm payrolls report. A weaker jobs figure could add pressure for a more significant rate cut, which is generally supportive of gold prices.
In the short term, immediate resistance stands at $2,500, while support is seen at the recent low of $2,471.91. A break above the $2,500 resistance could open the door for a retest of the $2,529 level. Conversely, a drop below the $2,480 mark may signal further downside risks for gold.
Also read: Copper prices edge higher on Fed rate cut hopes
In addition to the nonfarm payrolls report, market participants are keeping a close eye on the ADP employment report, which provides a measure of private-sector job growth, alongside jobless claims and U.S. services industry data. These reports could offer additional clues about the health of the U.S. economy.
Fed officials are also adding to the debate. Atlanta Federal Reserve President Raphael Bostic warned that keeping rates too high for too long could harm the U.S. employment market.
His comments suggest that the central bank might soon take a more dovish stance to avoid slowing the economy too much.
In the precious metals sector, spot silver dipped slightly by 0.1% to $28.244 per ounce, reflecting a quiet trading session for the metal. Platinum posted a modest gain of 0.7%, rising to $908.60 per ounce, while palladium remained flat at $933.75 per ounce, continuing its lackluster performance in recent sessions.
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With gold prices holding steady, the upcoming labour data scheduled for tomorrow will be pivotal in determining whether the Federal Reserve takes a more aggressive or cautious approach to interest rate cuts.
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