Today’s million-dollar question on every Gold trader’s mind is how the Non-Farm Payrolls will affect the Gold spot price (XAUUSD). The popular belief is that Gold has an inverse relationship with rising interest rates since capital flows towards high-yielding assets when rates grow.  

A 50 basis point rate hike by the Federal Reserve is on the table if the NFPs come higher than consensus as the U.S. continues its battle with inflation. 

Technical

XAUUSD recovered some losses following the market’s reaction to Fed Chair Jerome Powell’s hawkish stance on Tuesday. Resistance was formed at the 1851.29 level following the sharp selloff. Support at the 1809.50 level was respected with a rejection as bulls entered the market to drive the spot price higher. 

Volumes have sharply declined, and price has begun to consolidate in a sideway direction, forming a rectangle pattern with support and resistance at the 1827.02 and 1835.15 levels, respectively. A breakout to either side of the consolidation pattern on compelling volume could validate a sustained move in the direction of the breakout. Traders will likely look to the 1851.29 and 1809.50 levels with interest for a bullish and bearish breakout, respectively.  

Summary

The main driver for today’s price action will likely be the Non-Farm Payrolls release. As traders gauge inflations progress, a stronger Non-Farm Payroll will potentially trigger hawkish behaviour on the Gold spot price.  

Sources: Visual Capitalist, TradingView