Gold News: Tech Stock Plunge Adds Pressure Ahead of Payroll Data

Gold Prices Under Pressure as Traders Eye Key Moving Averages

Gold prices are under renewed pressure following a two-week consolidation near record highs. After briefly peaking at $2531.77, market sentiment has turned bearish, with attention now focused on the critical 50-day moving average at $2431.92. Gold has closed above this level since July 3, making a break below a potential turning point for the market.

At 11:03 GMT, XAU/USD is trading $2487.92, down $5.03 or -0.20%.

Equity Sell-Off Adds Pressure on Gold

The latest declines in gold are largely attributed to a sharp sell-off in equities, which triggered a rush to cover margin calls. Investors facing steep losses in tech stocks, particularly following a massive sell-off in Nvidia shares, have resorted to liquidating profitable gold positions to cover their losses.

As gold has been trending higher, it has generated significant paper profits, making it a prime candidate for selling during this period of equity-related margin pressure. The broader sell-off across global markets, with riskier assets hit hard by concerns over slowing global growth, has compounded the pressure on gold.

U.S. Economic Data Adds to Bearish Sentiment

U.S. manufacturing data released earlier in the week pointed to a moderate contraction in August, with factory activity remaining subdued amid a decline in new orders and rising inventories. Despite some improvement in employment figures, the weak manufacturing outlook has contributed to growing concerns over the health of the U.S. economy. Upcoming economic data, including U.S. factory orders and JOLTS labor market numbers, could further influence market sentiment, particularly as traders weigh the Federal Reserve’s next moves.

Focus Shifts to Non-Farm Payrolls and Fed Rate Outlook

The main event on traders’ radar is the upcoming U.S. non-farm payrolls report, which could have significant implications for the Fed’s rate-cut decisions. Market participants are currently pricing in a 39% chance of a 50-basis-point rate cut and a 61% chance of a 25-basis-point cut at the Fed’s September 18 meeting, according to the CME Group’s FedWatch Tool. Strong payroll data could dampen expectations for aggressive rate cuts, potentially placing further downward pressure on gold prices.

Gold Market Forecast: Bearish in the Short-Term

Given the current macroeconomic environment, gold is likely to remain under pressure in the short term.

The key 50-day moving average at $2431.92 will be critical in determining the direction of the market. If gold prices break below this level, it could signal a further bearish trend, especially if Friday’s non-farm payrolls report strengthens the case for a more hawkish Federal Reserve.

However, any dovish surprise from the Fed could offer support to gold, keeping volatility high in the near term. Traders should brace for potential price swings as key economic data continues to unfold.