Gold prices benefitted from the worse-than-expected NFP data from the US on Friday. XAUUSD bottomed at $1,545.63 during the Asian session and steadily traded higher to close at $1,561.98, $9.81 higher than where it opened.
Gold Prices Higher on Concerns About the US Economy
The much-anticipated NFP report for December failed to impress market participants. According to the report, there were only 145,000 jobs added during the month. This figure was lower than the forecast at 162,000. The unemployment rate printed as expected at 3.5%. However, average hourly earnings only grew by 0.1% and missed the forecast for a 0.3% uptick. These numbers, while not disastrous, sparked concerns about the health of the US economy. This especially so because average hourly earnings are at their lowest level since July 2018.
Gold’s reputation as a safe haven asset allows it to benefit from news that cause investors to worry. With that said, you should keep tabs on our site as we report on top-tier data due for release from the US this week. Economic reports are likely to dictate price action in the coming days now that US-Iran tensions have abated.
On the hourly chart, we can see that buyers have pushed gold prices above their recent consolidation. This is evidenced by the upside break on the triangle on XAUUSD. Now, the precious metal still has some room to move lower and maintain its short-term uptrend. Extending the uptrend from its recent lows, we can see that XAUUSD may find support at it. The price around $1,551.27 also seems to coincide with the 200 SMA.
On top of that, we can see that gold prices are testing their previous highs on the daily time frame. A bullish engulfing candlestick has already materialized around the 38.2% Fib level (when you draw the Fibonacci retracement tool from the low of December 6 to the high of January 8). If you sign up for our free trading course, you will learn why this is considered as a bullish confirmation signal. It could mean that buyers are already priming a rally to the recent highs on XAUUSD at $1,610.86.
However, we wary of a strong bearish close below the 38.2% Fib level. It could hint that sellers are still present in the market and XAUUSD could fall to $1,532.42.More content