Gold Price Forecast: XAU/USD sees downside below $1,720 ahead of US Employment Change

• Gold price is oscillating in a $1,723.03-1,727.20 range as investors await US Employment Change data.
• An upbeat US JOLTS Job Openings data strengthened the DXY.
• Fed Williams sees interest rates above 3.5% to cool down price pressures.

Gold price (XAU/USD) is displaying lackluster performance after a bearish perpendicular move on Tuesday. The precious metal is oscillating in a narrow range of $1,723.03-1,727.20 in the Asian session. The yellow metal is auctioning around Monday’s low and is likely to witness a steep fall after violating the critical support of $1,720.00.

The precious metal went through some severe pain after the US dollar index (DXY) picked bids on better-than-expected US job openings data and hawkish commentary from New York Federal Reserve (Fed) Bank President John Williams. The JOLTS Job Openings data landed at 11.239M, higher than the expectations of 10.475M and the prior release of 11.04M. While Fed’s Williams sees the inflation rate scaling lower to 2.5-3% next year and has raised targets for interest rates above 3.5%.

Going forward, investors’ entire focus will remain on US Automatic Data Processing (ADP) Employment data, which is expected to improve to 200k, against the prior release of 128k. The US labor market is extremely tight, which is delighting Fed policymakers in raising interest rates unhesitatingly.

Gold technical analysis

On an hourly scale, gold prices have slipped below the 61.8% Fibonacci retracement (placed from July 21 low at $1,680.91 to August 10 high at $1,807.93) at $1,729.72. The 20-and 50period Exponential Moving Averages (EMAs) at $1,728.89 and $1,733.33 are declining, which adds to the downside filters.

Also, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates more downside ahead.

Gold hourly chart