Baxia Markets
May 03, 2024

Mixed Fundamental Cues Keep XAUUSD in Limbo

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Gold prices (XAUUSD) continue to grapple with conflicting fundamental cues, as the Federal Reserve's less hawkish stance drags the USD to multi-week lows, offering support. However, bets for a delayed Fed rate cut and a positive risk tone ahead of the US Non-Farm Payrolls (NFP) report cap gains.

Despite managing to hold above a nearly one-month low, gold remains on the defensive for the second consecutive day. The Fed's indication of no rush to cut interest rates, coupled with positive sentiment in equity markets and easing geopolitical tensions in the Middle East, undermine demand for the safe-haven metal.
Mixed Fundamental Cues Keep XAUUSD in Limbo
However, the downside for gold is cushioned by the prevailing USD selling bias driven by Fed Chair Jerome Powell's less hawkish remarks. Traders are cautiously awaiting the US monthly jobs data for cues on the Fed's rate-cut path, which will influence the next directional move for XAU/USD.

On the 1-hour timeframe chart, gold prices range between $2327 and $2289, with slow-moving indicators like EMA 50 and 200 signaling bearish sentiment. While the MACD and RSI show bearish signals, the short-term trend is sideways.

Additionally, the volume profile indicator indicates prices sinking below the value area, with the point of control serving as a crucial level. A break above the point of control could signal a bullish reversal.

Overall, XAUUSD remains in a sideways trading pattern, awaiting key US economic news. Mixed results could favor XAUUSD, while higher-than-expected news may exert stronger bearish pressure. Traders remain cautious amidst the uncertainty surrounding gold's next move.

Key Takeaways:

  1. Fed's less hawkish stance drags USD lower, offering support to gold.
  2. Despite Fed's reluctance to cut rates, positive equity sentiment undermines gold demand.
  3. XAUUSD remains on the defensive, holding above recent lows.
  4. USD selling bias cushions gold's downside, but traders cautious ahead of US jobs data.
  5. Technical indicators show a sideways trend, with potential for bullish reversal if key levels break.

Key Economic Releases to Watch Today

USD, Average Hourly Earnings 

Forecast 49.9 vs Previous 51.9

USD,  Nonfarm Payrolls 

Forecast 1.10B vs Previous 1.39B

USD, Unemployment Rate

Forecast 1.10B vs Previous 1.39B

USD, S&P Global Services PMI

Forecast 1.6% vs Previous 1.4%

USD, ISM Non-Manufacturing PMI

Forecast 1.6% vs Previous 1.4%


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