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  • On Friday, the gold price forecast remains bullish above the long-held support level of 1,809 level.
  • Economists expect a favorable unemployment rate as it’s expected to drop from 5.4% to 5.2%.
  • Forex trading market participants may sell below the $1,807 level to target the $1,793 and 1,781 levels.

Gold prices closed at $1811.45 after reaching a high of $1819.55 and a low of $1806.75. After remaining flat throughout the trading session on Wednesday, gold prices started declining on Thursday despite the continuous fall in greenback prices. On Friday, the gold price forecast remained bullish above the long-held support level of 1,809 level. The major focus remains on the US Nonfarm Payrolls that are due to come out during the US session today.

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The Weaker Dollar Continues to Underpin Gold Prices

The US Dollar Index, which estimates the greenback value against the basket of six major currencies, fell for the 5th consecutive session. It reached its lowest in one month at 92.21. Furthermore, the US Treasury Yield on the benchmark 10-year note also dropped on Thursday to 1.28%. That added to the loss of the US dollar.

The precious metal was under pressure on Thursday as traders ignored a subdued dollar and squared their trading positions with eyes still on Friday’s nonfarm payrolls data. That could determine the tapering strategy of the US Federal Reserve. It seemed like the gold market was awaiting the jobs data and was unconcerned about anything that was making it move under consolidation.

The US dollar was weak across the board, but bullion did not notice it on Thursday and continued falling. Typically, gold tends to gain on the weaker dollar, making gold cheaper for holders of other currencies. However, some market participants also noticed data showing that fewer Americans filed jobless claims last week despite surging coronavirus cases.

Quick Economic Events Review

On the data front, at 16:30 GMT, the Challenger Job Cuts for the year dropped to-86.4% in August from the previous-92.8%. At 17:30 GMT, the unemployment claims from last week fell to 340K against the forecasted 342K and supported the US dollar. Thus, it added further loss to gold.

The Revised Nonfarm Productivity for the quarter also dropped to 2.1% against the expected 2.4%. It supported the US dollar and dragged yellow metal further on the downside.

The Revised Unit Labor Costs for the quarter surged to 1.3% in August against the predicted 1.0%, supported by the US dollar. The Trade Balance from July remained flat with the predictions of-70.1B. At 19:00 GMT, the Factory Orders from July came in line with the forecasted 0.4%.

Covid-19 Fear Continues Support Gold 

The White House coronavirus response coordinator, Jeff Zients, said that the United States would invest about $3 billion in the vaccine supply chain within the coming weeks. The official said that the vaccination was essential as the delta variant was picking up pace and cases were increasing, including among children. He added that the investment would also fulfill the pledge of President Joe Biden to be the “arsenal of vaccines for the world.”

US Nonfarm Payrolls Data in Focus 

The Bureau of Labor Statistics is due to report Non-Farm Employment Change, Average Hourly Earnings m/m, and Unemployment Rate data during the New York session. 

Economists expect a favorable unemployment rate as it’s expected to drop from 5.4% to 5.2%. However, the average hourly earnings and nonfarm payrolls data are expected to underperform this month. 

Speaking of the employment report from Automatic Data Processing, Inc., the figures dropped in August to 374K against the forecasted 640K. The ADP National Employment Report showed that US private employers hired far fewer workers than anticipated in August. However, an uptick in manufacturing activity in the United States helped the greenback gather strength. 

The ADA nonfarm is positively correlated with the US nonfarm payroll data. Thus, the negative data is boosting the bullish bias for gold.

US Nonfarm Payrolls
XAU/USD Daily Chart

Gold Price Forecast – Technical Levels

Support Resistance

1805.61 1818.41

1799.78 1825.38

1792.81 1831.21

Pivot Point: 1812.58

Gold Price Forecast – US Nonfarm Payrolls in Focus 

The gold price forecast remains bullish above the long-held support level of 1,809 level. On the 4-hourly timeframe, an upward trendline is extending support at the 1,809 level. However, the closing of candles above this level confirms its validity. 

On the bullish side, the resistance stays at the 1,821 level, and a bullish breakout of this level could extend the buying trend to 1,832. Alternatively, the selling trend dominates below the 1,808 support level.

On the bearish side, the support stays at the triple bottom level of 1,808. A bearish breakout of this level exposes gold prices towards the next support levels of 1,793 and 1,781 levels.

The 50 day EMA (exponential moving average – red line) holds at the $1,816 level, supporting gold’s bearish trend. Moreover, the leading indicator, Stochastic RSI, stays below 50, keeping the bearish trend ahead of US unemployment claims. Therefore, the Forex trading market participants may sell below the $1,807 level to target the $1,793 and 1,781 levels. Alternatively, traders can take a buying position above the $1,807 level today. All the best!

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