Gold price (XAU/USD) gains momentum to around $4,470 during the early Asian session on Friday. The precious metal extended its recovery as Federal Reserve (Fed) rate hike bets ease. All eyes will be on the US August Nonfarm Payrolls (NFP) report, which is due later on Friday.
Technical Analysis
In the daily chart, XAU/USD holds a constructive near-term bias as it remains above the 100-day simple moving average (SMA) and the Bollinger Bands middle line, suggesting underlying demand after the latest pullback. The Relative Strength Index (RSI) at 55.34 sits in neutral-to-positive territory, hinting that bullish momentum has cooled from overbought readings but still favors mild upside rather than a deeper correction.
On the topside, immediate resistance is located at the Bollinger Bands upper band near $4,675, where any advance would likely meet profit-taking and volatility expansion. On the downside, initial support is seen at the Bollinger middle band at $4,460, followed by the 100-day SMA at $4,360, while a deeper decline could test the lower Bollinger band around $4,245.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Fundamental Analysis
Earlier this week, hawkish remarks from Fed Chair Kevin Warsh at the Jackson Hole symposium drove expectations of a US September rate hike higher and weighed on the yellow metal. However, traders subsequently pared back their bets on further monetary tightening after Fed Governor Christopher Waller said he expects “reasonable” inflation readings next month.
Traders of Fed funds futures see a 50.2% chance of a quarter-point hike in September, down from 63.2% before Waller’s speech, according to the CME’s FedWatch tool.
“With the Fed currently offering no forward guidance, gold remains highly sensitive to shifts in market expectations for the September meeting,” said Saxo Bank Head of Commodity Strategy Ole Hansen.
Traders will closely monitor the US jobs data for August later on Friday, which could offer fresh cues on the US interest rate path. The Nonfarm Payrolls (NFP) is expected to show a 56,000 job addition in August, while Unemployment Rate is projected to hold steady at 4.1% during the same period. If the report shows stronger-than-expected outcomes, this could lift the US Dollar (USD) and drag the USD-denominated commodity price lower.
Waller keeps September options open as data-dependent stance tempers Dollar bulls
Fed Governor Waller delivered a moderately hawkish but data-contingent message, with the FXS Speechtracker score at 6.1 slightly softer relative to the historical average of 6.3. The key remark that Waller is inclined to support holding rates steady in September if August inflation shows continued progress, but would consider a hike if the data comes in hot, underscores a live-meeting, reaction-function focus that limits immediate repricing in the Dollar while preserving upside risk. Emphasis on emerging disinflation, solid GDP and a satisfactory labor market, alongside acknowledgment of upside inflation risks, keeps the tone cautiously hawkish rather than aggressively so.
The FXS Fed Sentiment Index fell by 2.06 points to 125.38, signaling a modest pullback in perceived hawkishness despite remaining firmly above the neutral 100 mark. This combination of a lower index reading and a still-elevated level indicates that, while Waller’s data-dependent stance has cooled some expectations compared to the established baseline, the overall policy tone remains in hawkish territory according to both the FXS Fed Sentiment Index and the FXS Speechtracker.
HSBC sees Fed on hold as core inflation remains contained
Analysts at HSBC argue that a further US rate increase is unlikely in the near term, provided that “high energy prices aren’t translating into higher core inflation.” They note that this “remains our base scenario,” stressing that the Fed will be reluctant to tighten policy further because “the US Federal Reserve won’t want low-income households to bear the pressure of higher rates.”
XAU/USD Forecast Poll
1 Week
- 67%
- Bullish
- 33%
- Bearish
- 0%
- Sideways
1 Month
- 29%
- Bullish
- 57%
- Bearish
- 14%
- Sideways
1 Quarter
- 43%
- Bullish
- 43%
- Bearish
- 14%
- Sideways
Gold (XAU/USD)
In the Forex market, Gold functions as a currency. The particularity of Gold is that it is traded against the United States Dollar (USD), with the internationally accepted code for gold being XAU.
Known as a safe-haven asset, Gold is expected to appreciate in periods of market volatility and economic uncertainty. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn't rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. The United States is the country that holds the biggest resources of Gold in the world.
The XAU/USD pair tells the trader how many US Dollars are needed to purchase one troy ounce of Gold.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold prices escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher borrowing costs usually weigh on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars. A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Organizations that influence XAU/USD
- WGC (World Gold Council) is the market development organization for the Gold industry. Its aim is to stimulate and sustain demand for the precious metal.
- LBMA (London Bullion Market Association) is an organization whose members participate in this wholesale over-the-counter market for trading Gold and Silver. It is loosely overseen by the Bank of England. Most LBMA members are major international banks, bullion dealers, and refiners.
- COMEX (Commodity Exchange) is the primary market for trading metals. The COMEX merged with the New York Mercantile Exchange (NYMEX) in 1994 and joined the CME Group in 2008.
- CGSE (Chinese Gold and Silver Exchange Society) is an organization of Gold trading firms in Hong Kong that are participants of the Chinese Gold and Silver Exchange, the first exchange in Hong Kong.
- Central banks like the Federal Reserve (Fed), the European Central Bank (ECB) or the People's Bank of China (PBoC) significantly influence Gold prices through their monetary policies.
People that influence XAU/USD
- Neal Froneman, the World Gold Council's Chairman.
- Scott Bessent, the US Treasury Secretary.
- Xi Jinping, President of the People's Republic of China.
- The London Bullion Market Association members.
Circumstances that influence XAU/USD
The main variables traders should monitor to understand Gold's position are:
- Demand and supply: The balance between global Gold demand and its availability impacts its price.
- Economic uncertainty and currency devaluation: Gold is widely known as a safe-haven asset for investors in periods of economic uncertainty or when a currency faces devaluation.
- Practical applications: The use of Gold in technology innovations, jewelry manufacturing and other industrial applications.
Assets that influence XAU/USD
- Currencies: The US Dollar (USD) and the Euro (EUR) are the primary currencies influencing Gold prices. Other important currency pairs include EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD, and USD/CAD.
- Commodities: Silver and Gold are the most important precious metal commodities.
- Bonds: Influential fixed-income securities include the German Bund (a federal government-issued bond) and the US Treasury Note (T-Note).
- Indices: Key indices related to Gold and mining include the HUI (NYSE Arca Gold BUGS), the XAU (Philadelphia Gold and Silver Index) and the GDM (NYSE Arca Gold Miners Index).
- Exchanges: The most important stock exchanges for Gold are the New York Mercantile Exchange (COMEX), the Chicago Board of Trade, the Euronext/LIFFE, the London Bullion Market, the Tokyo Commodity Exchange, the Bolsa der Mercadorias e Futuros and the Korea Futures Exchange.