Gold falls from daily highs, ends week up over 2%

The price of gold peaked at $2,477 before falling to $2,430, a decline of 0.60%.
US nonfarm payroll employment fell tiny of expectations, with unemployment rising and average hourly earnings falling.
Weak economic data fueled speculation the Federal Reserve will cut interest rates in September, with the yield on the 10-year U.S. Treasury note falling to 3.815%.

Gold prices are under pressure after hitting a two-week high of $2,477 earlier in the North American session. Data showed the U.S. labor market is feeling the effects of higher borrowing costs set by the Federal Reserve as the number of Americans applying for jobs fell. That boosted the gold metal, which rose more than 1% before retreating. XAU/USD is trading at $2,430, down 0.60%.

Wall Street saw significant declines, with most stock indexes falling at least 2.20% after the US Bureau of Labor Statistics (BLS) revealed that July nonfarm payroll (NFP) data missed expectations and June data was revised down.

With a dismal manufacturing PMI report released on Thursday by the Institute for Supply Management (ISM) still to be digested by traders, as well as today’s NFP data, the odds are rising that the Federal Reserve will cut interest rates at its September meeting.

Additional data showed the unemployment rate rose slightly, while average hourly earnings (AHE), a measure of wage inflation, fell slightly.

U.S. Treasury yields fell sharply following the data, with the 10-year U.S. Treasury note falling 16 basis points to 3.815%, its lowest level since March, supporting gold and silver prices.

As a result, the U.S. Dollar Index (DXY), a measure of the dollar’s value against six other currencies, fell more than 1% to 103.23.

US data over the past two days has supported Federal Reserve Chairman Jerome Powell’s statement that the federal funds rate could be cut in September if the US economy begins to serene down.

Another reason for the rise in precious metals is geopolitical risks. Tensions in the Middle East remain high as Israel awaits a response from Iran and Lebanon following the assassination of a Hamas leader earlier this week.

Daily Market Factors Review: Gold Price Falls on Recession Fears

The Federal Reserve decided to keep interest rates unchanged but indicated that favorable inflation data and further weakness in the labor market could prompt action.
The US Department of Labor revealed that the number of nonfarm payroll (NFP) jobs in July was 114,000, below estimates of 175,000, with the previous figure revised down from 206,000 to 179,000.
The U.S. unemployment rate rose from 4.1% to 4.3%, and average hourly earnings fell from 0.3% to 0.2%.
Following the data, most banks began pricing in more aggressive Fed easing. Bank of America expects the first rate cut in September, not December, while Citi and JP Morgan expect the Fed to cut rates by 50 basis points in September and November.
The CME FedWatch tool forecasts a 70% probability that the Federal Reserve will cut interest rates by 50 basis points at its September meeting.

Technical Analysis: Gold price retreats from intraday highs, below $2,450

Gold fell towards the July 31 low of $2,404-2,410, which can be attributed to profit taking ahead of the weekend as US bond yields and the US dollar remain at intra-week lows.

From a technical perspective, the XAU/USD pair will remain bullish and if buyers manage to close the day above $2,450, it could make it hard to reach the all-time high above $2,500.

A further weakening could see prices fall below $2,400, which could pave the way for a pullback to the 50-day moving average (DMA) at $2,364 and then a test of the 100-DMA at $2,337.