Article by: ETO Markets

Gold prices (XAU/USD) rebounded in the Asian session on Monday, erasing recent losses, supported by a disappointing U.S. jobs report and heightened geopolitical tensions. A weaker dollar and a dovish Fed further boosted gold. In particular, US non-farm payrolls increased by only 114K in July, below expectations of 175K, while the unemployment rate rose to 4.3%, the highest level since November 2021. These factors put the market pricing in a nearly 74% chance that the Fed will cut interest rates by 50 basis points at the September FOMC meeting. In addition, tensions in the Middle East, especially the risk of potential attacks on Israel by Iran and Hezbollah, further stimulated risk aversion and supported gold prices. Looking ahead, investors will focus on Monday's US ISM services PMI data for fresh market catalysts. The services PMI is expected to rise to 51.0 in July from 48.8 in June. If the data is stronger than expected, the dollar could rise, limiting the upside for gold prices.

From a technical point of view, gold prices maintain a positive outlook on the daily chart, staying above the key 100-day exponential moving average (EMA). The current 14-day Relative Strength Index (RSI) is around 58.0, showing bullish momentum. In the short term, it is possible to test the resistance level in the upper Bollinger band area which is the $…(July 17 all-time high). If these levels are breached, gold could break through the $… mark in one fell swoop. On the downside, initial support for gold is located near the 50-day moving average at $…. If it moves lower, the price could fall to the lower Bollinger band of $…. A sustained trade below that level would pave the way for $… (100-day EMA). Overall, gold prices remain bullish under multiple supporting factors, but need to be vigilant about the potential impact of the US dollar and US economic data on the market.