Just after the Federal Reserve hinted at the possibility of a pause in rate hikes in the future, the Gold Spot Price (XAUUSD) surged 2.75%, taking it to a fresh all-time high. In addition, fears of a potential recession have driven the yellow metal’s price higher as its safe haven status took first place.
The XAUUSD is on track to close a second week with gains, and now traders will turn to today’s main event. The U.S. Non-Farm Payrolls, set to be released later today, will have a significant bearing on the price of XAUUSD if the outcome surprises by a wide margin.
The XAUUSD has been in a sustained uptrend, with price trading well above its 100-day moving average to establish a new high. Support was established at the 1980.70 level, while the new all-time high formed resistance at the 2077.80 level.
Given that RSI Conditions are pointing to overbought levels, the sharp turn in the XAUUSD from resistance could validate a reversal at play. If bears hold their ground, the 1980.70 level could come into the picture if they commit to the move in high volumes.
Alternatively, the 2077.80 level could entice bulls to regain their grip on the yellow metal’s direction. If declining volumes accompany downside price action, it could indicate weakening bearish momentum and a reversal imminent.
Traders will seek to make sense of the U.S. economic state to discern where interest rates could go next. According to the CME FedWatch Tool, traders expect interest rates to take the easing path by the end of the year, while a pause is primarily expected in the next June meeting. The XAUUSD could find some tailwinds in a rate-easing environment as the greenback loses its appeal as a high-yielding currency. This could leave the all-time high or higher as a probable destination for the XAUUSD.
Sources: CME FedWatch Tool, Reuters, TradingView