By Rania Gule, Senior Market Analyst at XS.com – MENA
Gold (XAU/USD) continued its remarkable rise, approaching the $3,590 level during early Asian trading on Monday, on a bullish trajectory nearing its all-time highs. This movement reflects the markets’ direct response to recent U.S. data, particularly the nonfarm payroll report, which revealed a significant slowdown in hiring during August and an increase in the unemployment rate to its highest level since 2021. In my view, this performance indicates a weakening U.S. labor market. It reinforces expectations that the Federal Reserve may ease monetary policy at its upcoming meeting, lowering the opportunity cost of holding gold and enhancing its appeal as a safe-haven asset.
The latest jobs report, showing the U.S. economy added only 22,000 jobs in August, along with downward revisions to June data, signals a slowdown in labor market strength—a clear indicator of decelerating economic activity in the world’s largest economy. Given these developments, gold is expected to receive additional support from the anticipated interest rate cuts. Markets currently imply an 84% probability of a 25-basis-point reduction at the September 17 meeting, with a 16% chance of a more aggressive 50-basis-point cut. These probabilities reflect investor expectations for lower borrowing costs, thereby increasing demand for non-yielding assets like gold, which explains the continued buying pressure on the precious metal.
Moreover, growing demand from central banks remains a key supporting factor for gold. The People’s Bank of China added to its gold reserves in August, marking the tenth consecutive month of bullion purchases. China’s gold holdings reached 74.02 million ounces by the end of August, up from 73.96 million ounces in July. From my perspective, this step confirms that major central banks continue to strengthen their safe-haven assets amid global economic uncertainty, providing a sustainable support base for gold even amid dollar volatility or fluctuations in global financial markets.
As the new week begins, gold is showing signs of upward consolidation just below the $3,600 mark, the record high it reached last Friday. Despite a slight rebound in the U.S. dollar from its lowest levels since late July, the current fluctuation reflects a period of anticipation among traders ahead of upcoming U.S. inflation data, which could directly influence monetary policy expectations. In this context, gold remains sensitive to every move in the dollar: any significant strengthening of the U.S. currency could pressure the metal, while a weaker dollar would support continued gains.
From a technical and financial analysis perspective, a major surge in the U.S. dollar seems unlikely at present, given growing expectations for more aggressive Fed policy easing supported by weak labor market data. This situation places gold in a relatively strong position, also reinforced by ongoing central bank purchases, creating a balance between upward and downward pressures in the market. However, overbought levels may limit some traders from re-entering positions ahead of U.S. inflation figures, reflecting the market’s sensitivity and the tactical positioning of institutional investors.
Recent trading shows gold pausing temporarily to catch its breath amid a modest dollar rise and reduced safe-haven demand, as markets await forthcoming inflation indicators. The decline in the annual average wage to 3.7% from 3.9% in July points to slower wage growth, enhancing the likelihood that the Fed will continue to ease economic pressure via rate cuts. Therefore, I see gold well-positioned to benefit from a low-inflation environment and declining real yields on cash assets, increasing its attractiveness as a hedging instrument.
Gold is expected to remain relatively volatile in the near term, with U.S. inflation data likely to set the next direction for the metal. Should producer price figures exceed expectations, they may support the dollar and pressure gold, while continued weak data would bolster gold’s strength. Forecasts suggest up to three interest rate cuts by year-end, enhancing gold’s prospects for reaching new record levels. Major central banks, led by China, continue purchasing gold, establishing a robust foundation for global demand and mitigating the impact of short-term financial market fluctuations on the metal.
Overall, gold represents a resilient safe-haven asset amid a weakening dollar and a slowing U.S. labor market, supported by institutional buying and central bank reserves. Its future trajectory will largely depend on the combination of U.S. monetary policy, upcoming economic data, and global demand levels, making the precious metal a strategic tool for mitigating portfolio risk. I believe gold is capable of testing new record highs in the coming months if these supportive factors persist, with minor corrections possible if positive data unexpectedly strengthens the dollar.
In conclusion, gold remains on a continuous upward path, supported by U.S. employment weakness and central bank purchases, with strong prospects for further gains in September, making it one of the most attractive safe-haven assets amid a volatile global economic environment.
Technical Analysis of Gold ( XAUUSD ) Prices:
Gold has experienced a strong upward surge recently, touching the $3,600 level, driven by robust buying momentum and a series of consecutive higher highs and higher lows. The latest price action has formed a pattern resembling a completed “ABCD” at the current peak, suggesting a potential phase of consolidation or correction before attempting to resume the uptrend. Technical indicators, such as the stochastic oscillator, are showing a bearish divergence, supporting the scenario of a temporary pullback.
On the other hand, Fibonacci levels indicate key retracement zones, with the 0.33 level at $3,500 serving as the first potential support if the price begins to correct. Should this level be breached, the “Golden Zone” around $3,406–$3,420 remains a major support area from which the price could resume its upward trend. Continued trading above the main moving average further reinforces a positive medium-term outlook.
If the price manages to break the current resistance at $3,600 with a clear close, an upward extension toward $3,660 (R1) may be seen as the first target, with the potential to test higher levels near $3,700. Thus, the overall trend remains bullish as long as gold holds above its key support levels, while any breakout above resistance could pave the way for a new upward wave.
Support Levels: 3,500 – 3,420 – 3,406
Resistance Levels: 3,600 – 3,660 – 3,700