- The Gold price recovers its recent losses in Monday’s Asian session.
- Disappointing US employment reports and risk-off sentiment continue to support the yellow metal.
- Investors await the release of US ISM Services PMI for July, which is due on Monday.
Gold price (XAU/USD) gains traction on Monday on the softer Greenback. Markets are still digesting the FOMC’s dovish hold and softer US employment report. Meanwhile, the US Treasury bond yields and the US Dollar (USD) are likely to remain under pressure, which acts as a tailwind for the yellow metal. Additionally, the rising geopolitical tensions in the Middle East might continue to underpin traditional safe-haven assets like Gold.
Looking ahead, Gold traders will keep an eye on the US ISM Services Purchasing Managers Index (PMI) on Monday for fresh catalysts. The Services PMI is estimated to improve to 51.0 in July from 48.8 in June. In case of stronger-than-expected data, USD price might be lifted and cap the precious metal’s upside.
Daily Digest Market Movers: Gold price edges higher amid softer US jobs data and rising geopolitical risks
- US Secretary of State Tony Blinken told his counterparts from the G7 countries on Sunday that an attack by Iran and Hezbollah against Israel could start as early as Monday, three sources briefed on the call tell Axios.
- US President Joe Biden will convene National Security Council on Monday to discuss developments in the Middle East at 2:15 pm US Eastern time.
- The US Nonfarm Payrolls (NFP) rose by 114K in July from the previous month of 179K (revised down from 206K), weaker than the expectation of 175K.
- The US Unemployment Rate rose to the highest level since November 2021, coming in at 4.3% in July from 4.1% in June. The Average Hourly Earnings rose 0.2% month-over-month in the same reported period, below the market consensus of 0.3%.
- The marketplace is currently factoring in a nearly 74% chance for a 50 basis-point (bps) cut by the Fed at the September FOMC meeting.
- Chicago Federal Reserve Bank President Austan Goolsbee said on Friday that the Fed should not overreact to any one month’s numbers after the US NFP came in widely under forecasts, but noted that inflation and jobs data have both made significant progress in recent months.
Technical Analysis: Gold price keeps the bullish vibe in the longer term
Gold price trades stronger on the day. Nonetheless, the yellow metal maintains a constructive outlook on the daily timeframe as it holds above the key 100-day Exponential Moving Average (EMA), with the bullish 14-day Relative Strength Index (RSI) around 58.0.
The precious metal has traded within the ascending trend channel since mid-April. The first upside target emerges near $2,450 (high of May 20) en route to $2,483 (all-time high on July 17). Bullish candlesticks above this level could expose XAU/USD to potential bullish momentum all the way to the upper boundary of the trend channel of $2,515.
On the downside, the initial support level for Gold price is located at $2,355 (low of July 26). Further south could take the price down to $2,335, the lower limit of the trend channel. Sustained trading below this level would pave the way to $2,319 (100-day EMA).
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.25% | -0.10% | -0.07% | 0.12% | -1.85% | 0.11% | -0.79% | |
| EUR | 0.25% | 0.14% | 0.19% | 0.40% | -1.47% | 0.37% | -0.52% | |
| GBP | 0.11% | -0.14% | 0.04% | 0.24% | -1.64% | 0.23% | -0.66% | |
| CAD | 0.06% | -0.18% | -0.04% | 0.21% | -1.68% | 0.18% | -0.70% | |
| AUD | -0.15% | -0.40% | -0.25% | -0.22% | -1.89% | -0.03% | -0.89% | |
| JPY | 1.64% | 1.61% | 1.55% | 1.74% | 1.95% | 1.93% | 1.00% | |
| NZD | -0.12% | -0.37% | -0.23% | -0.19% | 0.02% | -1.94% | -0.91% | |
| CHF | 0.77% | 0.52% | 0.67% | 0.70% | 0.91% | -1.09% | 0.88% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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