Article by: ETO Markets

The volatility of the gold market this week was mainly influenced by the US non-farm payrolls data (NFP). The data showed that 142,000 jobs were created in August, below market expectations of 160,000, and the July figure was also sharply revised down. This has heightened expectations that the Fed will cut interest rates at its September meeting, driving gold prices higher. Despite the overall weak non-farm payrolls data, the unemployment rate fell to 4.2% from 4.3% and average hourly earnings rose 0.4% month-on-month, higher than the expected 0.3%, which could put some limits on gold's upward momentum. In addition, geopolitical tensions, especially a potential ceasefire between Israel and Hamas and the latest developments in the war between Ukraine and Russia, have also provided safe-haven support for gold. The ongoing fighting in eastern Ukraine, in particular, has kept market sentiment on edge, prompting investors to continue seeking safe havens such as gold.

On the technical chart, gold has continued to rebound since hitting a low in the $… area, forming two consecutive daily chart "hammer line" patterns, indicating that market sentiment has turned bullish in the short term. The pattern usually signals a reversal, and subsequent gains confirm this bullish trend. If gold can break through the all-time high of $…, a key resistance band, the market could further test the upside target of $…. At present, gold remains in a long-term bullish channel, with the Relative Strength Index (RSI) on the daily chart in the region above neutral, showing the potential for further gains. In the medium term, as long as gold remains above the 100-day simple moving average (SMA), the trend will remain in favor of the bulls. If gold fails to hold current support, initial support will be in the $… to $… area, which provided effective support in mid-August. A break below this level could expose gold to more significant downside risk, with the target pointing to the 50-day moving average near $….