Gold pushes higher above $1300, approaches 9-month highs
Following two straight days with losses, the XAU/USD pair started the day under pressure on Thursday and dipped below the $1300 handle before gaining traction in the second half of the day. On the back of a broad-based USD sell-off, the troy ounce of the precious metal gained more than $20. As of writing, the pair was trading at $1321, gaining 1% on the day.
Although the market sentiment seems to be positive in the NA session with the Dow Jones Industrial Average and the S&P 500 indexes adding 0.3% and 0.6% respectively, the pair's bullish momentum doesn't lose strength as investors remain focused on the USD weakness.
Today's data from the U.S. revealed that the core PCE price index, the favorite inflation gauge of the Federal Reserve, eased to its lowest level since late 2015 at 1.4% on a yearly basis, dampening the expectations of another 25 bps rate hike before the end of the year. After rising to its best level of the week at 93.30 in the European session, the US Dollar Index reversed course during the second half of the day and erased all of its daily gains. At the moment, the index is moving sideways near its daily low of 92.60, losing 0.25% on the day.
On Friday, investors will be focused on the nonfarm employment change, which is expected to drop to 180K in August from 209K in July. “After a slowdown this spring, monthly hiring broke back above 200,000 jobs in June and July. We expect another solid payroll print for August. Initial jobless claims declined in recent weeks, consistent with fewer layoffs,” said Wells Fargo analysts in a recent report.
- NFP preview: Another solid report coming in August - Wells Fargo
Technical outlook
With today's upsurge, the RSI indicator on the daily graph moved above the 70 mark, suggesting that the pair is likely to make a technical correction before extending its gains further. On the downside, the pair could face the first support at $1300 (psychological level) ahead of $1291 (20-DMA) and $1276 (Aug. 25 low). On the upside, resistances align at $1325 (Aug. 29 high), $1337 (Nov. 9, 2016, high) and $1350 (psychological level).
Today's data from the U.S.
- US: Personal income increased $65.6 billion (0.4%) in July
- US: Weekly initial claims was 236,000, an increase of 1,000 from previous week
- US-based employers announced plans to cut payrolls by 33,825 in August
- US: Pending home sales lessen 0.8% in July
- US: August Chicago Business Barometer stayed unchanged at 58.9