rose to $4,177 per troy ounce on Friday, after gaining more than 2% in the previous session. The main driver of the recovery was US labor market data, which came out weaker than expected, leading investors to reduce expectations of further interest rate hikes from the Federal Reserve.
In June, the U.S. economy added just 57,000 new jobs, well below the 110,000 expected — the weakest result in four months. The unemployment rate rose to 4.2%. Earlier in the week, the ADP report also noted a slowdown in private sector job growth.
Following the release of the data, the probability of a Fed rate hike in September fell to about 50%, down from 67% before the report. Additional support for the market came from comments from Federal Reserve Chairman Kevin Warsh, who highlighted the easing of inflation expectations while reaffirming the regulator's commitment to price stability.
Lower inflation risks remain a positive factor for gold. The restoration of commercial traffic through the Strait of Hormuz and progress in negotiations between the United States and Iran have contributed to a further decline in the , supporting sentiment towards the precious metals market.
Technical analysis
On the H4 chart, the market is trading within a consolidation range around the $4,038 level and has advanced to $4,190. A decline towards $3,929 is expected, followed by a possible rise to $4,170, with room for the trend to extend to $4,400. The MACD indicator signals a weakening bullish momentum, with its signal line above the center line but pointing firmly downwards.
On the H1 chart, the market broke through the $4,141 level and rose to $4,190. A fall towards $3,929 may follow, with a wide consolidation range forming around $4,060. The stochastic oscillator supports this scenario, with its signal line below 80 and pointing towards 20, indicating increasing bearish pressure in the short term.
Conclusion
Gold has seen a strong recovery following weaker-than-expected US labor market data, which significantly reduced expectations of further Fed rate hikes. The economy added just 57,000 jobs in June versus a forecast of 110,000, while unemployment rose to 4.2%, reinforcing signs of a cooling labor market. Fed Chairman Warsh's comments on easing inflation expectations have further supported the case for a more cautious outlook on rates. At the same time, progress in negotiations between the United States and Iran and the reopening of the Strait of Hormuz have helped lower oil prices, improving confidence in gold. Technically, gold looks set for a short-term pullback towards $3,929 before potentially resuming its upward trajectory.
By RoboForex Analysis Department
Disclaimer: Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
