Gold prices (XAU/USD) continued their strong rise and were trading around USD4,257.05 as of 2:22 pm (MYT), driven by a combination of geopolitical sentiment and a weaker US Dollar ahead of the release of US labor data tonight.
However, the main question for traders now is whether this bullish momentum can be maintained or will face selling pressure after the Initial Jobless Claims are published at 8:30 pm (MYT).
As an early indicator of the state of the US labor market ahead of the Nonfarm Payrolls (NFP) report on Friday, this data has the potential to change expectations for Federal Reserve (Fed) policy, thus determining the direction of the US Dollar and gold prices.
Fed Still Depends on Labor Data
Although US inflation is showing signs of getting under control, the Federal Reserve (Fed) still does not have enough confidence to shift to looser monetary policy.
For now, the market sees every economic data, especially labor market data, as the main determinant of the Fed's policy direction. As long as the job market remains strong, the Fed is expected to maintain a cautious stance and not rush to lower interest rates.
Therefore, tonight's Initial Jobless Claims data will be an important indicator of whether the US economy is starting to lose momentum or is still strong enough to support the Fed's stance.
Strait of Hormuz Becomes New Driver of Market Sentiment
In addition to economic data, geopolitical developments are now once again the main driver of the gold market.
Investors are currently focused on reports that Iran has shown willingness to reopen the Strait of Hormuz through ongoing diplomatic negotiations. The Strait of Hormuz is a strategic route that handles almost a fifth of the world's oil trade, so any developments related to this route have a direct impact on energy markets and global sentiment.
Although the reopening of the route is seen as being able to stabilize oil supplies, the market interprets the development as a factor that can reduce global inflationary pressures. Lower inflation expectations have increased speculation that the Fed may have room to adopt a less aggressive monetary policy approach in the future.
As a result, the US Dollar has started to lose momentum, while US Treasury yields have also shown signs of decline. This environment has increased the attractiveness of gold as an alternative asset and helped the price of XAU/USD continue to rise, approaching new highs.
However, traders should be careful as any changes in negotiations or official statements from the parties involved could change market sentiment in the short term.
Why is Today's Data So Important?
The main focus tonight is Initial Jobless Claims, which measures the number of individuals filing new claims for unemployment benefits in the United States.
Although published weekly, this data is often considered an early indicator of labor market strength before the official Nonfarm Payrolls (NFP) report.
Lower than expected → Labor market remains strong → US Dollar could strengthen → Gold could come under pressure.
Higher than expected → Labor market starts to slow → Fed expectations are more dovish → Gold could continue to rise.
Today's Key Triggers (Malaysia Time)
Data Impact Time
7:30 PM Challenger Job Cuts ⭐⭐
8:30 PM Initial Jobless Claims ⭐⭐⭐
8:30 PM Continuing Jobless Claims ⭐⭐
8:30 PM Nonfarm Productivity ⭐⭐
8:30 PM Unit Labor Costs ⭐⭐
10:00 PM Wholesale Inventories ⭐
10:30 PM EIA Natural Gas Storage ⭐
XAU/USD Technical Analysis
Gold prices remain in an uptrend based on the Daily chart, with the Higher High (HH) and Higher Low (HL) structure still intact.
After successfully breaking through the resistance zone around USD4,200, buying momentum continues to dominate the market and bring prices closer to the next resistance area.
However, the relatively rapid increase over the past few sessions increases the risk of profit taking activities if the US labor data tonight supports the strengthening of the US Dollar.
Current Price
USD4,257.05 (2:22 PM MYT)
Resistance
R1: USD4,275
R2: USD4,300
R3: USD4,350
Support
S1: USD4,230
S2: USD4,200
S3: USD4,160
Technical Bias
🟢 Bullish as long as price holds above USD4,230.
