GOLD Price Recovers After NFP-Induced Slump

Gold Price Recovers After NFP-Induced Slump

The gold market experienced a tumultuous ride following the release of robust US Nonfarm Payrolls (NFP) data, leading to a significant price swing. This article aims to provide insights into the factors influencing gold's recent performance, combining both technical and fundamental perspectives.

Technical Analysis:
After reaching a high of 2065.90, gold faced a swift reversal, retracing to the 61.8% Fibonacci level at 2031.10. The subsequent bullish impulse indicates the resilience of gold in recovering lost value. Notably, the dynamic trendline and the previous resistance zone have played a crucial role in supporting this rebound.

( GOLD Chart H4 Price Action Retest)

Fundamental Analysis:
The United States Bureau of Labor Statistics (BLS) reported robust NFP data for January, with 353K new hires, surpassing the consensus of 180K. This impressive job growth, coupled with a stable Unemployment Rate at 3.7%, has fueled a V-shaped recovery in the US Dollar. The data also revealed strong wage growth, with Monthly Average Hourly Earnings increasing by 0.6%, outperforming expectations and indicating a robust labor market.

Federal Reserve's Impact:
The upbeat NFP data has diminished expectations of an imminent Fed rate cut, with policymakers likely to maintain a more restrictive monetary policy stance for an extended period. This shift in sentiment has exerted downward pressure on gold prices.

Outlook and Conclusion:
Despite the recent pullback to the 61.8% Fibonacci level, gold's ability to retest the dynamic trendline and the previous resistance zone suggests a bullish outlook. The interplay between technical factors and fundamental drivers will continue to shape gold's trajectory. Traders and investors should monitor the evolving dynamics closely for potential trading opportunities in the gold market.

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