U.S. Payroll Data and Fed Rate Outlook Keep Gold Prices Steady at $2,746

Gold prices traded relatively flat on Friday, with spot gold holding at $2,746.09 per ounce as of 02:35 GMT, as investors took a cautious stance ahead of the U.S. nonfarm payrolls report.

This data, due at 12:30 GMT, is anticipated to offer insights into the Federal Reserve’s future interest rate moves. U.S. gold futures were up slightly, gaining 0.2% to reach $2,755.70 per ounce.

According to Edward Meir, an analyst at Marex, market participants are largely adhering to a “buy-the-dip” strategy, expecting price dips to present buying opportunities.

“This strategy is likely to remain in play through the U.S. election and perhaps beyond, as political and economic uncertainty persists,” Meir commented.

Interesting: #gold outperforms 20-year UST #TLT
-the Fed’s Sep 18th rate cut has coincided with the TLT’s peak (or bottom in chart). The 📈 gold widened its spread, w/c has now moved way above 200-ma.
-Trump trade 🤣or backlash on the Fed?
-Besides, gold📈 since since 2022 pic.twitter.com/7Ju7WNQWFs

— Lolo 3ben (@3benson) November 1, 2024

Democratic Vice President Kamala Harris currently holds a narrow lead over former Republican President Donald Trump, with polls showing a discontented electorate amid ongoing concerns about the U.S. economy’s direction.

The uncertainty surrounding the upcoming election has contributed to safe-haven demand for gold, helping prices gain over 4% in October.

Fed Rate Cut Expectations Buoy Gold as Inflation Eases

The Fed’s anticipated actions remain central to gold’s outlook. The CME FedWatch Tool now shows a 95% probability of a 25-basis-point rate cut at next week’s meeting, driven by a combination of steady inflation decline and strong economic indicators.

“With no recession in sight and inflation pressures cooling, the economy’s fundamentals look solid. The key question is how quickly the Fed will start cutting rates,” said Meir.

Gold, which doesn’t yield interest, typically benefits in a low-interest-rate environment as it becomes a more attractive store of value.

On Thursday, data indicated that U.S. labor costs posted their smallest gain in over three years during the third quarter, while initial jobless claims fell to a five-month low, further suggesting economic resilience.

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— Fundamental Research Corp. (@FRCorp) October 31, 2024

Technical Outlook: Key Levels to Watch for Gold Prices

Gold has shown technical resilience after bouncing off its upward trendline support near $2,730.

Currently, prices are trading close to the 38.2% Fibonacci retracement level at $2,754, which could serve as a base for bullish momentum.

Key resistance levels to watch include $2,760 (the 50% Fibonacci level) and $2,768, with a possible upside target at the recent high of $2,790.

On the downside, immediate support lies at $2,745. A break below this level could see gold revisiting $2,730 or even $2,725.

The Relative Strength Index (RSI) is recovering from oversold territory, sitting around 43, indicating potential for renewed buying interest.

Meanwhile, the 50-period EMA at $2,760 acts as a crucial level for sustained upward movement.

Key Takeaways:

• Upcoming U.S. payroll data to guide Fed’s rate decisions, impacting gold prices.
• Market expects a 95% chance of a 25-basis-point Fed rate cut next week.
• Technical levels: Key resistance at $2,760 and support at $2,745.

This strategic alignment of economic indicators and technical levels underscores gold’s appeal amid persistent uncertainty, especially as the U.S. election looms and investors seek safe-haven assets.