XAU/USD started with significant losses on today, with prices on the brink of a solid recovery from the gap. The fall could be triggered by comments from the US Federal Reserve Vice Chair Richard Clarida, who said “given the conditions for an interest rate hike could be met in late 2022 or early 2023. The higher interest rates raise the opportunity cost of holding non-interest yielding gold. The higher USD valuations make gold more expensive for holders of other currencies”. Same time the Global economic recovery is uneven among the Delta variants.

U.S. Labor Department’s jobs report is going to release on today for July will be an important component that will shape and determine adjustments to the current monetary policy of the Federal Reserve The central bank has stressed that they are directly tied to the state of the economy in terms of what they start to take and the normalization of interest rates.  Also, they adjusted their dual mandate to maintain the 2% target inflation rate to focus on full employment while facilitating full employment and allowing inflation rates to remain hot. Their basis is that current increases in inflationary pressures are temporary and will continue to be reduced as the country returns to a much stronger economy.            

Dalio who is a long time Gold investor said in a article that “Inflation readings in the United States have risen in recent months. Labor markets are extremely tight. In one recent survey, 46% of small-business owners said they could not find workers to fill open jobs, and a net 39% reported having increased their employees’ compensation.

However some economists differ greatly in today’s report estimates.. Yahoo Finance reported that “though job growth will likely still be well above pre-pandemic trends, some economists warned that the consensus estimate for July’s payroll gains may be excessively upbeat. Since the June jobs report, the Delta variant has swept across the country, exacerbating many workers’ concerns over becoming infected in the workplace.

Depending on the today releases of Labor Department’s jobs report the trend can be predicted, as it would force the hand of the Fed to expand their time frame as to when they will begin tapering their monthly asset purchases and raise interest rates. Meanwhile the impending fears of tapering and disappointment from ADP Employment Change, an early signal for today’s US Nonfarm Payrolls (NFP), are changing confidence. The multi-day rise in corona virus numbers from the US, China and Australia is challenging market sentiment and pushing downward pressure on the price of gold, emphasizing need for the US dollar’s safe-haven demand.

XAU/USD 4 Hour Chart:

Support: 1796.0 (S1), 1788.4 (S2), 1779.0 (S3).

Resistance: 1813.1 (R1), 1822.4 (R2), 1830.1 (R3).

Amidst the above catalysts appears bearish move on yellow metal. As of now we expect bearish trend for XAU/USD.