- The continuation of the gains of the US dollar brings more losses to the gold price, which affected the support level of $1931 an ounce, at the time of writing, which is the lowest price in three weeks.
- And as I mentioned before, the level of the US dollar may remain around its gains until the reaction to the US job numbers at the end of the week's trading.
The US dollar was not affected this week by the credit rating downgrade of the United States. Rating agencies such as Fitch and its peers, Standard & Poor's, and Moody's Investors Service, rate all types of corporate and government debt, from local government bonds to debt issued by large banks. Generally speaking, when a debt issuer's credit rating is downgraded, this often means that they have to pay a higher interest rate to compensate for their potentially higher default risk.
processor ADP released a report on Wednesday showing that US private sector employment jumped by much more than expected in the month of July. ADP said private sector employment jumped by 324,000 jobs in July after rising by a downwardly revised 455,000 jobs in June. Economists had expected private sector employment to increase by 189,000 jobs compared to the increase of 497,000 jobs originally reported for the previous month. For her part, Nella Richardson, chief economist at ADP, said that "The economy is performing better than expected and the healthy labor market continues to support household spending."
Much stronger-than-expected job growth came as leisure and hospitality jobs jumped by 201,000 jobs. Employment in the natural resources and mining sector also witnessed a remarkable increase, amounting to 48 thousand jobs, while employment in the manufacturing sector decreased by 36 thousand jobs. Meanwhile, ADP noted wage growth for the unemployed slowed to 6.2 percent, the slowest pace of gains since November 2021. For job changers, wage growth slowed to 10.2 percent.
On Friday, the US Labor Department is due to release its closely watched report on employment for the month of July. Employment is currently expected to increase by 200,000 jobs in July after rising by 209,000 jobs in June, while the unemployment rate is expected to remain at 3.6 percent.
Gold Technical Outlook
According to the performance on the daily chart below, the gold price is still moving inside a bearish channel opposite to the performance of the past two weeks, and the bears' control over the trend will strengthen if prices move towards the support levels 1922 and 1900, respectively. From the last level, technical indicators will give strong oversold signals, and from it you can think of buying gold again without risk.
On the other hand, and for the same time period, the bulls will not regain control of the trend without returning to the vicinity of the $1970 and $1985 resistance levels, respectively. The current performance guarantees a bearish weekly closing for gold unless the US job numbers come with a setback to the current gains of the US dollar, which will be an opportunity for gold to fully compensate for its losses.
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