Daily analysis

XAU/USD sees upside above $1,740 amid lower consensus for US NFP

Gold price (XAU/USD) is displaying a lackluster performance after defending the immediate cushion near $1,736.00. The precious metal is auctioning in a narrow range of $1,737.00-1,738.28, however, an extension in recovery seems favored amid a correction in the US dollar index (DXY).

After printing a fresh two-decade high of 109.40 on Monday, the DXY shifted into a correction mode ahead of the lower consensus for the US Nonfarm Payrolls (NFP). Considering the market forecasts, the US NFP is expected to decline to 285k, against the prior release of 528k. Investors should be aware of the fact that the US economy is operating near full employment levels for the past seven months, which squeezes room for more job additions. Therefore, a decline in consensus for the US employment generation should not be considered as employment softening.

Also, the Unemployment Rate is seen as stable at 3.5%. One more economic data in which the market participants are keenly interested in the earnings data, which is expected to improve by 10 basis points (bps) to at 5.3%. As price pressures are advancing dramatically, earnings have remained subdued. Therefore, households are facing headwinds amid higher payouts for inflation-adjusted goods and services.

Gold technical analysis
On an intraday scale, the gold prices are forming a Bullish Flag chart pattern that indicates a continuation in the upside momentum after a consolidation phase. A bullish cross, represented by the 20-and 50-period Exponential Moving Averages (EMAs) at $1,735.00, indicates more upside ahead.

Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range from the bullish range of 60.00-80.00. This doesn’t warrant a bearish reversal but states that a time correction will trigger a fresh rally ahead.

Reference by: Investing.com