Gold (XAU/USD) & Silver Price Forecast: NFP Week Keeps Bullion in Focus as Gold Tests Key Breakout

Gold News: Softer U.S. Data, NFP Forecasts Keep Gold in Focus

Gold and silver are being impacted by anticipation of a softer NFP report, decreased inflation, and softening economic data out of the U.S. Gold and silver are also being impacted by increased demand for safe havens in anticipation of the release of NFP reports. The U.S. labor market is now of primary importance following the unexpected drop in June’s JOLTS job openings.

This drop prompted beliefs that hiring demand is also expected to drop. Investors will be focusing this week on Wednesday’s ADP report, Thursday’s jobless claims, and the official employment report for Friday in order to understand the impact on the labor market and the potential influence that information will have on the Federal Reserve’s September policy. It is expected that nonfarm payrolls for July will show an ADD of 95,000 to the job market for the month, showing a drop from the previous month of 121,000.

The unemployment rate is expected to show an increase to 4.4% for the month. Reports that indicate job growth for the month is lower will give credibility to beliefs that the Fed will take a more conservative affect on policy, while reports that show job growth for the month is greater will prompt increased expectations of more policy tightening.

Precious metals continue to improve as geopolitical concerns ease as the U.S. and Iran find common ground through Qatar. This has impacted oil prices, along with the expectations of decreased inflation, with traders showing a 59% probability for the September Fed Funds rate hike, compared to the recent average of 67%. Decreased U.S. Dollar inflation and the expectation of a data dependent Fed policy support gold.

In the medium term, fundamentals remain constructive for Silver because of industrial demand from the growth of solar photovoltaics, AI infrastructure, advanced electronics, and the expansion of the power grid. Along with continued central bank diversification into gold and the increasing amount of uncertainty around the upcoming employment data, these structural drivers of demand will continue to sustain the outlook for precious metals, even in an uncertain environment around monetary policy.                                                          

Gold (XAU/USD) Technical Analysis: Breakout Above Double Top Signals Fresh Bullish Momentum

Gold

Gold has closed above the double top at $4,115 and is eyeing $4,136. The break above the double top extends the tops of the distribution and the descending trend line from the July top. With the tops in distribution broken, the Gold bulls are back in control.

Gold rallied to $4,136 on Friday and pushed above the 50-EMA ($4,068) and 100-EMA ($4,071), which have both resistive connotations on their tail. On the upside, the first targets can be set at $4,148, $4,181, and $4,211. If the buyers take a breather but don’t change the trend, the first target will be met at $4,115 and the second target at $4,079.

The bullish Gold momentum is also confirmed by the bullish RSI, which is at 67, a strong bullish signal that is not yet overbought. While Gold trades above $4,115, the double top breakout is intact, and will lead to higher highs and new record highs.

Silver (XAG/USD) Technical Analysis: Triangle Breakout Opens Door Toward $61

The symmetrical triangle in Silver has broken to the upside, and we can expect a move to $61. The break of the distribution top at $60.09 confirms the new bullish momentum. Silver has been in a range bound check since mid August.

Price is currently trading above both the 50-EMA ($58.53) and the 100-EMA ($58.69), further solidifying the bullish structure. Price will likely encounter resistance at $60.99, $61.87, and $63.09, in that order. In the event of a breakdown, the first area of support will be at the breakout level at $60.09, with $59.32 providing support in the event of a deeper pullback.

With RSI at 64, a bullish structure remains. As long as support is kept at $60.09, buyers are likely to continue to target $61.00-$62.00 in the coming sessions.