The precious metal traded sluggish and mainly bearish last week, but it closed the week with gains, rising sharply and breaking the resistance at $1,830.
Gold rallied for the second Friday in a row. Gold quotations gained 1.4% on August 27 and 1.2% a week later. During the trading on September 3, the raise was worth $22.20. That resulted in the yellow metal passing $1,830 key level to its highest reading at $1,833.70 since June 16.
The precious metal gained 0.8% over the week, marking its fourth weekly gain in a row. Though overall, the gold was sluggish over the period, except Friday. The metal price was held back by uncertainty. The market was expecting the release of the US non-farm payrolls data for August.
The statistics were published at the end of the week. The report was weaker than supposed. Economists had expected the employment to jump by 720,000 jobs, while in reality the reading increased only by 235,000 jobs. Analysts explained the sharp drop in hiring rates by the increasing cases of COVID-19 delta variant and fears of a new coronavirus wave.
Naeem Aslam, chief market analyst at AvaTrade noted that the US labor market had a long way to recover from the pandemic losses.
This means that the US Fed had another good reason for postponing the process of winding down asset purchases. Investors took the negative statistics as a signal to keep the current monetary policy. As a result, the dollar index fell by 0.1% to its lowest level at 91.94 since August 4. The greenback ended the week down 0.6%.
This factor increased the appeal of gold as a safe-haven asset, which had a positive effect on its pricing. On Friday quotations soared above the psychologically important level of $1,830. Analysts believe that reaching more than 2-month high opens new prospects for the metal.
They think the support of the 200-day moving average at $1,809 retains the gold's bullish potential. Now that bullion has formed a solid base above $1,800, it will be approaching a new high.
Experts emphasize that the next important target for gold is testing the $1,850 level. The Fed's dovish position may push up the asset. It will result in pressure on the dollar.
Meanwhile, on Monday morning the gold slightly dropped from a 2-month peak as part of the correction. The yellow asset was trading below $1,830, while the US currency, on the other hand, was trying to rebound and the US 10-year bond yield rose to about 1.326%.
Notably, experts do not expect any higher volatility today, as the US and Canadian markets will be closed on the occasion of Labor Day.
Moreover, specialists do not expect any significant volatility in the next few days as well. Everything will be decided again on Friday, when the next important statistics will be due. This time investors expect the US producer price index release for August.
The material has been provided by InstaForex Company - www.instaforex.com