Buying gold up to $3,600 following correction

After yesterday’s extreme technical overbought conditions, gold returned to its previous support level at $3,510, as was widely anticipated. And now the precious metal has every reason to surge again.

Concerns over US long-term Treasury bonds have flooded the market in recent months, triggering significant capital inflows into safe-haven assets, including gold. A similar situation is unfolding in the UK, where the national debt issue has intensified as 30-year government bond yields hit multi-year highs.

According to data from the US Bureau of Labor Statistics (BLS) and the Job Openings and Labor Turnover Survey (JOLTS), the number of vacant positions on the last working day of July was 7.18 million, below June’s revised figure of 7.35 million (down from the initial 7.43 million) and the forecast of 7.40 million.

The Canadian labor productivity report for the second quarter was particularly weak, coming in at -1.0% compared to the previous value of -0.1%. Such a strong decline was caused by a trade standoff with the US and a corresponding fall in commercial exchange between the two countries. Similar figures were last observed five years ago during the COVID-19 pandemic.

Trader attention is now shifting to the ADP employment report—a survey of private-sector job creation that is usually released before the government's official Nonfarm Payroll (NFP) data. Weaker-than-expected employment figures would affect the US economic outlook, increasing capital flows into gold. The US Non-Manufacturing Purchasing Managers' Index (PMI) for August will also be released soon. A decline in new orders might have a negative impact on the US stock market and the dollar, while providing a boost to safe-haven assets.

The overall recommendation is to buy gold. Profits should be taken at $3,600. Stop Loss could be set at $3,460.

The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.