Gold Positions for Gains with Pending US Economic Data

Gold held steady near $2,520 per ounce on Friday, close to one-week highs as traders awaited the highly anticipated US jobs report. This report could bolster expectations for a significant interest rate cut by the Federal Reserve. Lower interest rates might reduce the opportunity cost of holding non-yielding gold. Recent data highlighted a weakening labor market, with the ADP reporting that US private sector hiring in August was the lowest in 3.5 years. This, combined with a notable drop in US job openings for July and subdued manufacturing activity, has raised concerns about the US economy and increased expectations for a substantial 50 basis point rate cut this month. However, an unexpected rise in the ISM Services PMI, fueled by higher new orders and prices, eased some worries. Despite this, markets are currently pricing in a 41% chance of a 50 basis point cut and have upped their bets on a total of 125 basis points in cuts for the year. As a result, gold is poised to advance over the week.

Technically the first support level is at 2,4500. If this level is breached, the next supports to watch will be 2,470 and 2,430. On the upside, the initial resistance is at 2,530; if this level is surpassed, the next targets will be 2,550 and 2,585.