The U.S. dollar has shown signs of recovery, bouncing off the 98.700 level and invalidating the 4-hour fair value gap between 99.112 and 98.871. This shift wasn’t solely driven by economic data but was also influenced by intraday buying pressure that began early in the trading session yesterday. The dollar’s rebound gained further momentum after the JOLTS Job Openings report revealed 7.391 million job openings, surpassing the expected 7.1 million. This positive data reinforces the view that the U.S. labor market remains tight, complicating the outlook for rate cuts and providing a supportive backdrop for the dollar.
Gold’s Resilience Amid Dollar Strength
Despite the dollar’s recent rebound, gold has remained resilient, holding above the $3,330 level. As mentioned in my previous analysis, gold is eyeing the $3,400 mark as the dollar struggles ahead of the upcoming Non-Farm Payrolls (NFP) data. The $3,325-$3,345 range has acted as a strong support level for gold, which now faces the crucial test of maintaining this support to sustain the upward momentum.
The key support level for gold’s sustained upside is the $3,330 low. If this level holds, gold could continue its move higher; however, a breach below this level may indicate a deeper pullback. Notably, gold has managed to avoid significant breakdowns despite rising real yields and a stronger dollar, suggesting that underlying demand remains robust. This demand may be driven by factors such as geopolitical risks, portfolio hedging, or traders positioning themselves ahead of Friday’s NFP report.
What’s Ahead for Gold and the Dollar?
If Friday’s labor data echoes the strength shown in the JOLTS report, we could see another leg higher for the DXY (U.S. Dollar Index), potentially capping gold’s upside. On the other hand, if the labor and services data underperform expectations, gold could find a fresh bid and push higher, retesting the resistance near the $3,400 level.
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