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MTrading Team • 2023-01-31

XAU/USD Bulls Emerge ahead of the FED

XAU/USD Bulls Emerge ahead of the FED

For a 3rd day in a row, gold prices are drifting down, while traders are waiting with anticipation for the key events of this week.

Major banks are about to publish crucial data and reports. They include the FED, the European Central Bank, and the Bank of England to release the latest job report. While the gold price is drifting lower, it has been down by 0.29% running into its low of $1920.74.

Meanwhile, the USD rose along with the US Treasury bond yields emerging ahead of the FED’s policy committee. So, markets are currently pricing in a 25-bias point hike.

The FED and US Nonfarm Payrolls to Watch

When it comes to gold price predictions, nonfarm payrolls and the FED are the factors to watch for. At the same time, the gold price can be influenced by other factors that include the surge of the US Dollar as the result of the tightening labor market.

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The FED seems to be not done with tightening its policy stance. So, another downshift may turn out to have a positive effect on the gold price. The FED officials are pushing back against market calls for a pivot. In simpler words, they will keep the rates within a restrictive zone until it helps to reduce inflation and eventually bring it down.

Experts believe that the road to cutting down inflation will be full of surprises and unexpected turns. The easiest part is to get it from 8% to 4%. However, getting it from 4% to 2% back will be much harder. So, markets must be well aware of all possible difficulties and unpredictable moves in that way.

What’s more, we should take into account the rising US Nonfarm Payroll. It continued to increase in January. As we know, the gold price also depends on this particular data released in the employment report. Some expect it to reach 175K after a slight drop back in December 2020. No matter what, we can see the labor market is still very tight featuring low layoffs.

Still, the key factor to watch for is the Unemployment Rate. Experts predict it to rise from 3.5% to 3.6%, which will definitely damage the USD price and support the gold price instead.

May the trading luck be with you!