Gold price gathers strength for further upside ahead of US labor market data

• Gold price aims to sustain above $1,920.00 as pressure builds on US Dollar and Treasury yields.
• Fed’s September policy action will be highly guided by August labor market data.
• US Raimondo and China’s Wang Yi agree to launch a platform on export control information.

Gold price (XAU/USD) gathers strength to extend its recovery above $1,920 as the Federal Reserve (Fed) holds economic indicators accountable for further policy action. Jerome Powell reiterated at the Jackson Hole Symposium that the central bank will remain data-dependent. Powell added that inflation has become more responsive to the labor market, so upcoming JOLTS and other job-market-related data later this week are set to be crucial to determine the Fed’s next steps. .

US employment and ISM Manufacturing PMI data will remain on investors’ radar. The weightage of August labor market data is expected to remain high as it will provide a base for September’s interest rate decision. Investors hope that hiring momentum slows as US firms are banking on lower operating capacity due to a delicate economic outlook. Also, factory activity is expected to contract for the ninth straight month.

Daily Digest Market Movers: Gold price shifts focus to labor market data

• Gold price aims for a confident auction shift above $1,920.00 as investors gung-ho for value-buying, knowing that interest rates by the Federal Reserve are not far from peaking.
• The recovery move in the Gold price is also backed by a subdued US Dollar and declining US Treasury Yields. The US Dollar Index (DXY) struggles to climb above 104.00, while 10-year US bond yields drop to near 4.18%.
• The US Dollar comes under pressure as Fed Chair Jerome Powell reiterated at the Jackson Hole Symposium that further policy action will depend on economic data.
• Jerome Powell kept doors open for further policy tightening as the achievement of price stability has a long way to go. Two months of lower inflation levels is just the beginning of what the central bank wants to build.
• Cleveland Fed Bank President Loretta Mester supported one more interest rate hike in 2023 this week to ensure that the goal of price stability is achieved before 2026.
• After the hawkish Powell commentary, investors shifted focus to the Automatic Data Processing (ADP) Employment Change data for August, which will be published on Wednesday at 12:15 GMT.
• The central bank has evidence that inflation is getting more responsive to labor markets. Powell said that further signs of a tightening job market could warrant more Fed action.
• Powell’s commentary about the job market has increased the significance of August employment data as it will provide a base for September’s monetary policy.
• For the ADP data release, the US private sector is expected to have added 195K jobs in August, significantly lower than July’s reading of 324K.
• Before US ADP Employment data, investors will focus on JOLTS Job Openings for July, which will be released at 14:00 GMT. As per estimates, US firms posted fresh 9.465M vacancies, lower than June’s job openings figure of 9.582M.
• Apart from the labor market data, investors will also keep the ISM Manufacturing PMI data for August on their radar, which will be released on Friday.
• US factory activity is expected to contract for a ninth consecutive month, according to estimates. The ISM Manufacturing PMI is seen at 47.0, slightly higher than July’s reading of 46.4. Still, a figure below the 50.0 threshold signals a contraction in activity.  The New Orders Index, a widely followed leading indicator, is expected to drop to 46.3 from 47.3.
• On Monday, the Texas Manufacturing Outlook Survey reported that a key measure of state manufacturing conditions fell six points to -11.2, its lowest level since May 2020.
• Investors are keenly focusing on US Commerce Secretary Gina Raimondo's visit to China. Raimondo said the administration is aware of challenges and optimistic about US-China ties.
• Raimondo and China’s Foreign Minister Wang Yi agreed to launch a platform on export control information.

Technical Analysis: Gold price climbs above $1,920

Gold price looks confident above $1,920.00 as value-buying kicked in on hopes that the interest-rate peak is near. The precious metal climbs above the 20- and 200-day Exponential Moving Average (EMA), which indicates a solid recovery attempt. In spite of this revival move, the yellow metal has to pass through some more filters for a sustained reversal.