Gold price is undergoing a corrective phase for the second consecutive day, retreating from its recent record peak of $2,305 reached during Thursday’s Asian trading session. The downturn is attributed to a broad rebound in the US Dollar (USD), fueled by hawkish comments from US Federal Reserve (Fed) policymakers and escalating geopolitical tensions between Israel and Iran. Traders are now awaiting the release of the US Nonfarm Payrolls (NFP) data, which is expected to provide further direction to the market.
All Eyes on US Nonfarm Payrolls Report As the US Dollar strengthened on Thursday following hawkish remarks from Fed officials, market sentiment shifted towards risk aversion, leading to a USD rebound. Fed policymakers expressed concerns about housing inflation and the possibility of delaying rate cuts if inflation persists. These comments dampened expectations for an imminent Fed rate cut, influencing market probabilities. Meanwhile, geopolitical tensions between Israel and Iran added to the risk-off sentiment, further supporting the USD’s recovery.
Geopolitical Tensions and USD Strength Geopolitical tensions between Israel and Iran intensified after reports of a potential Iranian attack, prompting Israel to bolster its defense measures. Despite CIA warnings and escalating tensions, the USD maintained its strength, exerting downward pressure on gold prices. While geopolitical uncertainties typically support gold as a safe-haven asset, the prevailing USD strength offset some of the metal’s appeal.
Impact of US Nonfarm Payrolls Data The upcoming release of the US Nonfarm Payrolls data poses a significant risk to gold prices. Economists anticipate a moderate increase in job additions for March, with a slight decline in Average Hourly Earnings. Weak US economic data could reinforce dovish Fed expectations, potentially resuming the upward trajectory of gold prices.
Gold Price Technical Analysis On the daily chart, the correction in gold prices was triggered by overbought conditions, as indicated by the 14-day Relative Strength Index (RSI). The metal failed to sustain its momentum above the key $2,300 level, prompting a pullback towards immediate support levels. A breach below $2,265 could lead to further declines towards the psychological $2,250 level. However, a resurgence in buying pressure could propel gold prices towards new highs, with a break above $2,305 signaling further upside potential towards $2,350.
In summary, gold prices are experiencing a corrective phase amidst a USD rebound and geopolitical tensions. The outcome of the US Nonfarm Payrolls data release will likely determine the metal’s near-term direction, with technical levels providing key support and resistance zones.
