31.08.202109:54 Forex Analysis & Reviews: Gold edges lower amid volatile US dollar

Yesterday, gold's 2-day winning streak ended. The precious metal was incurring losses amid the greenback's attempt to recover after plunging to its 2-weeks low.

In the previous week, the asset scored a 2% gain. On Friday, the quote soared by 1.4% after Fed Chair Powell's speech at the Jackson Hole central-bankers symposium.

Jerome Powell suggested that tapering could start as early as this year but refrained from setting an actual date.

Powell also drew a clear distinction between a reduction in asset purchases and an increase in interest rates. In other words, if the regulator begins tapering, it does not mean that it will increase interest rates.

As a result, investors pushed gold to its 4-weeks high. At the same time, the greenback plunged to its 2-weeks low.

Yesterday, the situation changed and the US dollar recovered. Notably, a monthly US Department of Labour report should provide solid support to the greenback.

The US unemployment rate is estimated to fall to 5.2% in August from 5.4% in July. In addition, average hourly earnings should rise by 0.4% m/m.

All this may indicate a steady recovery of the US economy from the coronavirus pandemic and give the dovish Fed members another reason to tighten monetary policy. All this will be considered a positive factor for the US dollar and a negative factor for gold.

For that reason, amid cautious trading in the precious metals market, gold tumbled but remained above the psychologically important level of $1,800.

On August 30, gold fell to $1,812.20, down by 0.4%, or $7.30, from the previous close. Early today, the asset reversed and went up amid a weaker US dollar.

At the moment of writing, the precious metal gained 0.32%, or $5.75, and was trading at $1,817.95 per ounce. Meanwhile, silver added 0.46%, settling at $24.117. Yesterday, it lost 0.4%.

On Tuesday, traders are still focused on the upcoming US Department of Labour report. Nonfarm payrolls is another closely-watched report. The US economy is expected to add 665K new jobs in August, which is 300K less than in July.

Experts suggest that disappointing nonfarm payrolls data for August is likely to be a reason for the Fed to postpone tapering again. In such a case, the greenback may test new lows, while gold may reach new highs.

Sevens Report Research believes that the Federal Reserve's cautious attitude towards tapering may boost gold. Thus, if the quote breaks above the high of $1,835, gold may well skyrocket to $1,900.