Yellow metal reached small gains due to weaker dollar meanwhile investors are waiting for U.S. Jobs data to gauge the Federal Reserve’s plans to start tapering asset purchases. The US economy is seen adding 750K jobs in August vs. a 943K addition seen previously. An astounding bull run in local equity markets amid the Covid-19 pandemic has taken the shine off gold and historically one of the most in-demand assets during a crisis.

Yesterday, initial jobless claims and continued claims were eased from the weekly market consensus that ended Aug. 27. The four-week average of Initial Jobless Claims also declined from 366.75K to 355K. Previously, both the ADP job change and the US ISM manufacturing PMI employment component indicated a contraction in US jobs and the need for more flexible monetary policies. Besides, looming Delta covid variant concerns and hopes for more Chinese stimulus continue to put a floor under gold price.

This week John Paulson, president and portfolio manager at Paulson & Co and Mark Mobius, founder of Mobius Capital Partners, both made headlines for bullish calls on the precious metal. Monday, in an interview with Bloomberg’s David Rubenstein, Paulson said that he prefers gold over bitcoin and that the precious metal looks attractive in the current inflationary environment. “Gold does very well in times of inflation,” he said. Paulson added that gold can go “parabolic” because it is relatively small compared to the overall financial market.

On the other hand opportunities for a merger between the ECB and the Federal Reserve are creeping forward and weighing the green back. Inflation concerns continued on Tuesday, with eurozone inflation rising to 3% in August, the highest in a decade and above the European Central Bank’s 2% target, as well as a 2.7% Reuters forecast. This comes after last week when Philip Lane of the ECB spoke at Jackson Hole last week. He basically promised to measure the ECB QE plan upwards and downwards to financial positions. This could favor the Gold purchases.

In August, layoffs fell to their lowest level in more than 24 years, with the number of Americans filing new demands for unemployment benefits falling last week, claiming that the labor market is charging even as the new Covid-19 pandemic escalates. The Department of Labor will release the Non-Farm payrolls Report for August at 1230 GMT. Solid jobs recovery is the import criterion for the US Federal Reserve to initiate pandemic-period triggers. Gold is seen as a safeguard against inflation, which may be the result of massive economic stimulus measures.

Analysts have noted that gold struggles to attract attention. Investors are focusing on the laser in a possible shift in U.S. monetary policy as the Federal Reserve reduces its monthly bond purchases by the end of the year. For many analysts, non-farm reports on Friday will be an important stimulus for gold. Some analysts say weak job growth in August could force the Federal Reserve to delay its tapping plans, which could push the price of gold back to $1,900 an ounce. At the same time however a stronger-than-expected employment report will solidify the Federal Reserve’s plan to push the price of gold to their recent lows.

XAU/USD 4 Hour Chart:

Support: 1803.9 (S1), 1798.4 (S2), 1791.8 (S3).

Resistance: 1816.0 (R1), 1822.6 (R2), 1828.1 (R3).

Amidst these above catalysts yellow metal is on gaining mood and waited for U.S. Jobs data. We expect a bullish trend for XAU/USD.