The gold price rallied more than 2% on Thursday, climbing above $4,487, after Federal Reserve Governor Christopher Waller adopted a more neutral stance. Waller, previously known for his hawkish views on inflation, said he would advocate holding interest rates steady if upcoming data confirms the disinflation process is still intact. However, he did not rule out a rate hike if price pressures re-emerge.
The move comes ahead of Friday’s August Nonfarm Payrolls (NFP) report, which is expected to show a rebound from a contraction of 23,000 jobs to a gain of 56,000. The unemployment rate is forecast to hold at 4.1%. Money markets currently price a 54% chance of a 25-basis-point rate hike at the 16 September Federal Open Market Committee (FOMC) meeting, according to Prime Terminal, down from earlier expectations.
Mixed US data supports the case for a pause
Thursday’s economic releases painted a conflicting picture. Initial Jobless Claims for the week ending 29 August rose to 206,000 from 204,000, slightly above the 205,000 forecast. The ISM Services PMI increased to 55.4 from 54.1, beating the estimated 54.3, indicating solid business activity in the services sector. However, the Prices Paid sub-index jumped to 72.6 from 70.3, the highest since August 2022, suggesting that input costs remain elevated.
Waller’s comments, combined with the mixed data, reinforced the view that the Fed may choose to hold rates steady rather than tighten further. The dollar weakened broadly, with the greenback also under pressure from speculation that Japanese authorities may intervene to support the yen. Resumed hostilities in the Middle East added a safe-haven bid to gold.
Technical levels in focus
Gold broke above the 1 September high of $4,461 and accelerated toward $4,500. The Relative Strength Index (RSI) has turned moderately bullish, signalling that buyers are gaining strength. If XAU/USD clears $4,500, the next resistance is the 200-day Simple Moving Average (SMA) at $4,533. Above that, the $4,600 mark and the August monthly high of $4,697 would be the next targets.
On the downside, initial support is at $4,400, followed by the 100-day SMA at $4,358. A deeper pullback could bring the $4,300 level into play, with the 50-day SMA at $4,232 acting as the next floor.
Investors are also watching speeches by Cleveland Fed President Beth Hammack, due later on Thursday, and the live gold price will be sensitive to any further clues about the Fed’s policy path.
Key takeaways
- Gold rallied more than 2% on Thursday to $4,487 after Fed’s Waller advocated for a rate pause if disinflation continues.
- US jobless claims ticked up to 206,000, while the ISM Services PMI beat expectations but prices paid rose to a 12-month high.
- Money markets now see a 54% probability of a September rate hike, down from previous levels.
- Technical resistance at $4,500; support at $4,400 and the 100-day SMA at $4,358.
Common questions
Why did gold jump on Thursday?
Gold surged after Fed Governor Christopher Waller said he would support holding interest rates steady if inflation continues to cool. This dovish shift reduced expectations for a September rate hike, weakening the US dollar and boosting the precious metal.
What are the key levels to watch for gold?
Immediate resistance is at $4,500, followed by the 200-day SMA at $4,533 and the August high of $4,697. Support lies at $4,400, then the 100-day SMA at $4,358, and further down at $4,300 and $4,232.
Gold’s rally on Thursday was driven by a combination of dovish Fed commentary, mixed US data, a weaker dollar, and renewed geopolitical tensions. Traders now turn their attention to Friday’s NFP report for the next major catalyst.