Gold Price Forecast: XAU/USD advance held back by strong US ISM PMIs.

• XAU/USD rose to a daily high of $1,952 and was then rejected by the 100-day SMA, pulling back to $1,940.
• Yields in the US initially fell after the mixed US NPF results, but recovered after the strong US ISM in August.

At the end of the week, the price of Gold XAU/USD erased the daily gains, falling back towards the $1,940 area. After initially pulling back, US yields rallied during the American session, but the yellow metal will still post a week gain of more than 1%.

The long-awaited US Nonfarm Payrolls report for August came in mixed numbers. On the positive note, NFP rose to 187,000, up from 170,000 expected and 157,000 previously. Average hourly earnings were soft, up 0.2% MoM versus 0.3% expected. Unemployment rose to 3.8% in the same month, against all forecasts.

In terms of economic activity, US Institute for Supply Management (ISM) manufacturing PMI numbers were above consensus in August, with an actual reading of 47.6, above the expected figure of 47, versus to the previous 46.4.

US bond yields, often thought of as the opportunity cost of owning gold, were volatile on the back of employment and economic activity figures. The 2-year yield fell to lows around the area of ​​4.76% and stood at 4.85%. Likewise, the yields to 5 and 10 years fell to their lowest level since August 10 and stood at 4.27% and 4.15%, respectively. As for expectations of the next Federal Reserve (Fed), markets reduced their bets for a further rate hike in 2023. According to the CME’s FedWatch tool, investors remain confident that the Fed will not raise rates at the September meeting. , and the odds of a hike in November and December fell to almost 35%.

XAU/USD Levels to Watch

According to the daily chart, the technical outlook for XAU/USD is leaning from neutral to bearish as signs of bullish exhaustion emerge. The Relative Strength Index (RSI) shows a negative slope above its midline, and the Moving Average Convergence Divergence (MACD) shows fading green bars. With a downtrend below its midline, the RSI suggests bearish sentiment, while the MACD shows weaker green bars. On the other hand, the pair is below the 100-day SMAs, but above the 20- and 200-days, suggesting that buyers still have gas left in store.

Support levels: $1,930, $1,915 (convergence of the 20-day and 200-day SMA), $1,900.

Resistance levels: $1,950 (100-day SMA), $1,970, $2,000.

XAU/USD Daily Chart