- Gold price gains ground for the fourth day in a row and remains near a multi-week high.
- Expectations that the Federal Reserve will pause in September weigh on the US dollar and support XAU/USD.
- Looming recession risks further benefit safe-haven Gold; a positive risk tone limits gains.
The price of Gold (XAU/USD) attracts some buying for the fourth day in a row on Thursday and breaks above the $1,945 level again at the start of the European session, approaching the four-week high reached the previous day. XAU/USD could now try to consolidate its recovery from the low since March 13, around the $1,885 region touched last week.
The US dollar (USD) weakens near two-week lows hit after disappointing US macroeconomic data released on Wednesday and turns out to be a key factor acting as a tailwind for the dollar-denominated gold price. In fact, Automatic Data Processing (ADP) reported that US private sector employers added 177,000 jobs in August, well below the prior month’s downwardly revised reading of 324,000 and missing expectations. from a reading of 195,000. In addition, the second estimate showed that the US economy grew at an annualized rate of 2.1% in the second quarter, compared to the 2.4% growth reported initially.
Against the backdrop of a drop in the Conference Board Consumer Confidence Index from 114.0 to 106.1 in August, the data reaffirms market expectations that the Federal Reserve (Fed) will pause its rate hike cycle in September. This continues to put some pressure on US Treasury yields, keeping dollar bulls on the back foot and benefiting the yieldless gold price. Apart from this, concerns about a deeper global economic downturn appear to provide additional support for the precious metal, although a positive risk tone could cap any further gains, at least for now.
Furthermore, traders would prefer to stay on the sidelines ahead of the release of the US Personal Consumption Expenditure (PCE) price index, the Fed’s preferred inflation gauge, early in the American session. Markets continue to price in the possibility of a 25 basis point (bp) hike by the US central bank in 2023. Therefore, the data will influence expectations about the Fed’s rate hike path, which in turn This will in turn boost demand for the US Dollar and provide further impetus to the Gold price. Barring a positive surprise from US inflation data, the fundamental background suggests that the path of least resistance for XAU/USD is to the upside.
Technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
