Gold Price Jumps 5% This Week Alone...Will It Continue Its Surge on the Back of the Employment Report?

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Gold prices jumped 5% this week, heading for their strongest weekly gain since January. Ahead of the release of the US employment report, whether the $4,250 level can be defended has emerged as a key variable for short-term trends.

According to FXLeaders, a financial market specialized media outlet, on August 7 (local time), gold (XAU/USD) rose 5% this week, recording $4,254. Falling international oil prices, a weaker dollar, and declining US Treasury yields pushed up gold prices. With a slowdown in private sector employment also confirmed, expectations for an additional interest rate hike by the Federal Reserve (Fed) in September have also lowered. Market attention was focused on the US Non-Farm Payrolls (NFP) report released on the same day.

A Reuters survey projected non-farm employment to increase by 80,000 in July. The increase in June was 57,000. The unemployment rate was expected to remain at 4.2%, and the annual wage growth rate was projected to be around 3.5%. The market's implied probability of a September rate hike decreased from 63% the previous week to 55%. Analysis suggests that if employment and wage indicators are stronger than expected, the Fed's hawkish outlook and profit-taking pressure could increase again.

Leading indicators for the labor market were favorable for gold prices. According to ADP, the US private sector added 44,000 jobs in July. This was a significant decrease from 95,000 in June and fell short of market expectations of 70,000-75,000. Initial jobless claims for the week ending August 1 slightly increased to 199,000. Continuing jobless claims stood at approximately 1.8 million. FXLeaders analyzed that the slowdown in job growth and the decline in Treasury yields increased the investment appeal of non-interest-bearing gold.

Technically, the upward trend is maintained. Gold has broken above the downtrend line and a symmetrical triangle that had persisted for several weeks. It is also holding above the 50-period exponential moving average (EMA) at $4,178 and the 100-period EMA at $4,133. However, the Relative Strength Index (RSI) has moved down after entering the overbought zone, indicating a slight slowdown in upward momentum. The first resistance level is $4,280, followed by $4,303 and $4,367 as target levels.

On the downside, $4,236 is indicated as the first support level. Subsequent support levels are $4,195 and $4,162. FXLeaders analyzed that a bullish trend is maintained above $4,236, but if $4,195 breaks, it could signal a weakening of the upward momentum that followed the recent breakout. Gold prices have recovered from $4,000 in June to $4,250, and the US employment report has been identified as a key variable determining short-term price movements.

[Article Key Summary]

-Gold prices rose 5% this week, heading for their strongest weekly gain since January.

-US non-farm employment in July is projected to increase by 80,000, and the unemployment rate is expected to remain at 4.2%.

-The technical resistance level is $4,280, and if broken, $4,303 and $4,367 are presented as the next target levels.

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