August 04, 2022 3:54:57 AM E.T
By: AnalysisWatch
The gold price continues the slight upward movement of the previous day and gains traction for the second day in a row on Thursday. The steady intraday rise has continued into early European trading, with the XAU/USD pair reaching a new daily high in the $1,774-$1,775 range.
Growing concerns about a global economic slowdown and tensions between the U.S. and China triggered by the Taiwan trip of U.S. House of Representatives Speaker Nancy Pelosi continue to provide a tailwind for gold. That being said, the fact that there has been selling around the U.S. dollar provides additional support for the dollar-denominated commodity. Despite the more dovish comments from FOMC members, the USD struggled this week to recover from its lowest since July 5 amid declining U.S. Treasury yields.
However, the prospect of further Fed policy tightening may keep bulls from placing aggressive bets on gold without yield. Indeed, several Fed officials hinted this week that further rate hikes are likely in the near future. This, along with the recent rally in global equity markets, could help limit gains in the XAU/USD safe haven. Investors may also prefer to retreat to the sidelines ahead of the release of the highly anticipated monthly U.S. jobs data.
The widely anticipated NFP report is set to be released on Friday and will have a significant impact on USD price dynamics.This in turn would act as a new catalyst that should allow traders to determine gold's near-term price action. Traders will be guided in the meantime by the Bank of England's monetary policy decision on Thursday.Later, during the early North American session, the usual weekly US jobless claims could provide some trading opportunities around the XAU/USD.