Gold Prices Under Pressure as US Dollar Rebounds Ahead of NFP Report
Gold prices retreated to daily lows near $3,230 per troy ounce as the US Dollar staged a modest rebound alongside a recovery in US Treasury yields. The precious metal remains under pressure, testing a key technical support level ahead of the highly anticipated US Nonfarm Payrolls (NFP) report, which could dictate its near-term trajectory.
Technical Outlook: Gold Holds Critical Support
Gold is currently clinging to the 21-day Simple Moving Average (SMA) at $3,234, a crucial support level following its recent breakdown from a three-week rising channel. The 14-day Relative Strength Index (RSI), hovering just above the midline at 52.50, suggests a potential pause in the correction phase.
Key Scenarios to Watch:
- Bullish Rebound if NFP Disappoints:
- A weaker-than-expected NFP report could reinforce expectations of Federal Reserve rate cuts, pushing Gold toward $3,260 (static resistance-turned-support).
- A sustained break above this level could reignite bullish momentum, targeting 3,350∗∗and eventually the former channel resistance near ∗∗3,350∗∗ and eventually the former channel resistance near ∗∗3,405.
- Bearish Breakdown if NFP Beats Expectations:
- Strong jobs data could bolster the US Dollar further, leading to a breakdown below the 21-day SMA ($3,234).
- A sustained move lower may expose 3,150∗∗(psychological support) and the ∗∗50−day SMA at 3,150∗∗ (psychological support) and the ∗∗50−day SMA at 3,087.
Fundamental Drivers: Fed Policy, US-China Trade Talks, and Economic Data
Several factors are influencing Gold’s performance:
1. US-China Trade Optimism Weighs on Safe-Haven Demand
China’s Commerce Ministry confirmed that the US has expressed willingness to negotiate on tariff issues, raising hopes of a potential de-escalation in trade tensions. This has contributed to a risk-on sentiment, reducing demand for safe-haven assets like Gold.
2. US Dollar Strength and Fed Rate Cut Expectations
The US Dollar Index (DXY) hit a three-week high amid mixed economic signals:
- Weak GDP and Cooling Labor Market: The US economy contracted in Q1 2024, while jobless claims rose to their highest level since February.
- Soft Inflation Data: The PCE Price Index showed easing inflation, reinforcing bets that the Fed may cut rates four times this year.
3. US Jobs Data in Focus
Today’s NFP report is expected to show:
- Nonfarm Payrolls: 130K (vs. 228K prior)
- Unemployment Rate: 4.2% (unchanged)
- Average Hourly Earnings: +0.3% MoM
A strong jobs report could delay Fed rate cut expectations, boosting the Dollar and pressuring Gold further. Conversely, weak data may revive dovish Fed bets, supporting a Gold rebound.
Conclusion: Gold at a Crossroads Ahead of NFP
Gold’s near-term direction hinges on today’s NFP report and Fed policy expectations.
A hold above 3,234 (21−daySMA)
∗∗ could signal are bound, while a breakdown may extend losses toward ∗∗3,234 (21−daySMA)
∗∗could signal a rebound,while a breakdown may extend losses toward ∗∗3,150.
Traders should watch for Fed rhetoric and US-China trade developments, which could further influence market sentiment.
For now, caution prevails as investors await fresh catalysts to determine whether Gold resumes its uptrend or faces deeper corrective declines.
