The Gold spot price (XAUUSD) reached its highest in a year after economic data in the U.S. pointed to a slowdown in economic activity. The Gold spot price, which generally reacts positively in times of economic downturn or uncertainty, gained 2.17% week-to-date.
Gold traders will closely monitor the week’s main event, with the release of the Non-Farm Payrolls (NFP) looming. If the NFP follows the trend of weakness across the U.S. employment and manufacturing sector, the XAUUSD could find some tailwinds as fears of an economic slowdown ring across the market.
The Gold Spot Price has been in an uptrend, trading above the 100-day moving average, forming a rising wedge pattern. After a high volume breakout above the prior resistance of 1997.63, support was formed. The 2069.59 level forms resistance, and bullish traders will likely be on the hunt for it.
If bullish traders push ahead with volumes, the spot price could be led towards resistance at the 2069.59 level. Alternatively, if bearish traders look to undo the progress the bulls made above the 1997.63 level, price action could retrace towards the level to retest it before market sentiment reworks the next move. This move could be validated by declining volumes to the upside, indicating declining bullish momentum.
A slowing U.S. economy will likely support the Gold spot price as traders look to hedge against a probable recession. The majority of traders are now wagering on a pause in interest rate hikes by the Federal Reserve in the next FOMC meeting. If the U.S. economy cools, the $2000 psychological level could act as support in the near term.
Sources: Reuters, CME FedWatchTool, TradingView