Despite worrying elements like a higher unemployment rate and less average weekly hours, the recent outperformance of the NFP data has had a relatively small influence on Gold. This information might have been taken by the market as indicating that the labor market was resilient but slightly less constrained, which might have reduced inflation without significantly worsening the economy.
Even while the sub-index showing lower prices paid has sparked some fear that core inflation may decrease, the ISM Services PMI's poor performance hasn't had any impact on Gold either.
While the improvement represented in Continuing Claims suggested that people were able to find jobs rather quickly after being without one, the big shortfall in Jobless Claims last week was interpreted with caution, perhaps due to seasonal adjustments that may have skewed the data. All of the aforementioned factors should have boosted gold prices, but it appears that the market is simply anticipating tomorrow's US CPI news.
On the daily chart, we can see that the decline in gold prices came to a halt at the upward trendline, which also serves as a support level for the 50% Fibonacci retracement level and a previous swing low level. The sellers tried numerous times to break even in this powerful zone, but they were unable. We can see that the sellers leaned on the red 21 moving average to prepare for additional short sales, and the moving averages are still crossed to the south, signaling a downturn. The purchasers may begin to feel more confident about further gains if there is a break above the moving average.
The price movement that has been in a range for almost a month is readily seen on the 4-hour chart. The support at 1934 and the resistance at 1984 are the two important levels to keep an eye on here. In addition, we can observe that there is a crucial mid-level at 1954 where we can observe a number of market rejections, maybe as a result of more aggressive traders relying on it to position in expectation of a breakout.
There are a number of important events taking place this week. The much-anticipated US CPI report expected for tomorrow serves as the official start to everything. Expectations for the impending FOMC rate decision, which will happen the next day, are anticipated to be strengthened by this data. A hot report, particularly one on the Core CPI, could cause gold's price to decline further and most likely cause a breakout to the negative. However, if the data is consistently off, we should observe a breakout and a rally towards the 2076 high.
In addition, the University of Michigan consumer mood survey will be released later in the week, along with a new Jobless Claims report. This survey's previous release significantly affected the market, particularly as a result of a sharp increase in long-term inflation predictions.