Gold fell by almost $100 on Friday after stronger-than-expected US jobs data surprised markets. The drop, which amounted to more than 2.5%, pushed the precious metal towards a second consecutive weekly loss. The sharp move came as traders reassessed the likelihood of a rate rise at the Federal Reserve's September policy meeting.
What the Jobs Report Showed
US nonfarm payrolls surged in August, easing earlier concerns about the health of the labour market. The upbeat figures prompted investors to raise their bets on a rate hike when the Federal Open Market Committee meets on 16 September. Higher interest rates increase the opportunity cost of holding gold, which pays no yield, and typically weigh on the metal's price.
Friday's decline marked a significant acceleration of the sell-off that had already been building in recent sessions. The gold price is now trading well below the levels seen earlier in the week, and the technical picture on the daily chart has deteriorated.
Technical Signals Turn Mixed
On the daily chart, the 14-day momentum indicator is pressing against the centreline, while the relative strength index (RSI) is heading south and approaching the neutral 50 level. These signs suggest that the recent downward move has not yet exhausted itself, but they also warn that the trend could pause if buyers step in.
The moving averages present a conflicting picture. The 30-period and 100-period averages show a bullish cross, but the 10-period and 200-period averages have formed a death cross. This mixed setup means that further price action to the downside is needed to confirm the developing negative signals.
For now, traders are watching key support levels. A close below the previous significant support zone around $4,400 would be a minimum requirement for a bearish continuation. Below that, the daily Kijun-sen line on the Ichimoku chart sits at $4,358. A break of that level would strengthen the negative structure and expose $4,319, the 50% Fibonacci retracement of the rally from $3,942 to $4,697. That level has already repelled several attacks in recent weeks. Further down stands $4,268, the top of the daily cloud. On the upside, repeated closes below the daily Tenkan-sen at $4,489 are needed to keep the near-term bias with sellers.
What Comes Next
Market attention now shifts to next Friday's release of US August inflation data. The consumer price index (CPI) figures will provide the Fed with important information ahead of its policy meeting. If inflation remains elevated, it could strengthen the case for a rate hike. If it shows signs of easing, the gold market might find some relief.
For investors tracking these moves, you can follow the live gold price on GoldRate.info.
Key Takeaways
- Gold dropped nearly $100 (over 2.5%) after a surprise surge in US nonfarm payrolls raised expectations of a September rate hike.
- The metal is set for a second consecutive weekly loss.
- Technical signals are mixed: momentum is weakening, but moving averages offer conflicting cues.
- Traders now focus on US August inflation data due next Friday for further direction.
Common Questions
Why did gold fall on the jobs report?
A stronger-than-expected US nonfarm payrolls figure reduced fears about a slowdown and boosted the probability of a Federal Reserve rate hike at its September meeting. Higher rates make gold less attractive compared to interest-bearing assets.
What technical levels are traders watching?
Key downside levels include $4,400 (previous support), $4,358 (daily Kijun-sen), $4,319 (50% Fibonacci retracement), and $4,268 (daily cloud top). On the upside, closes below $4,489 (daily Tenkan-sen) are needed to sustain the bearish bias.
The coming week's inflation data will be decisive in determining whether gold can stabilise or extend its decline.