10.08.202609:51 Forex Analysis & Reviews: Gold Around $4,350 After Best Week Since January: Weak Employment Eases Rate Hike Threat

Gold has already risen by 0.2 percent to $4,350.84 today, staying above the 50-day moving average after a surge of more than 7 percent last week. Silver rose by 1 percent to $64.15, platinum added 0.1 percent, while palladium decreased by 0.7 percent.

The rally was triggered by a sharp shift in monetary policy expectations following Friday's report, which showed that American employers cut jobs in July, and data for the previous two months were revised downward. This eased concerns about an imminent Federal Reserve rate hike, directly supporting the non-yielding metal, as high borrowing costs are traditionally a headwind for it. The dollar's weakening after the report further supported dollar-denominated commodities.

Positioning by large players confirms the change in sentiment. According to the latest CFTC data, hedge funds and asset managers increased bullish bets on gold to the highest level in over six months for the week ending August 4. In recent weeks, the metal confidently surpassed the key support level of $4,000 per ounce. After the decline provoked by the war that drove gold into a bear market in June, the number of buyers in the market has noticeably increased during pullbacks.

Structural support from Asia remains an important factor. The inflow of funds into gold-backed exchange-traded funds in China last week marked the longest such period since March. The People's Bank of China also continued to increase its gold reserves: according to data released on Friday, the July increase of 640,000 ounces became the 21st consecutive month of accumulation. This sustained buying activity from the central bank creates a long-term demand foundation regardless of short-term fluctuations in rate expectations.

However, the scale of the fallen market remains a significant reminder of how far it is from full recovery. Despite the recent rise, gold is still almost one-fifth below the levels that existed before the war with Iran began at the end of February. The geopolitical backdrop remains unresolved: over the weekend, Iran and Oman failed to reach a final agreement on reopening the Strait of Hormuz.

The key factor in the coming days will be US inflation data. The significance of this data is heightened by the increasing divergence of opinions within the Fed on how to curb inflation driven by the multi-month war in the Middle East, and fresh price indicators may tip the balance in favor of one camp within the central bank.

Regarding the current technical picture for gold, buyers need to take the nearest resistance at $4,372. This will allow targeting $4,432, above which it will be quite challenging to break through. The furthest target will be around $4,481. In the case of a decline, bears will attempt to take control over $4,304. If they succeed, breaking this range will deal a serious blow to bulls' positions and push gold down to a low of $4,249, with the prospect of reaching $4,186.