Article by: ETO Markets
Gold prices (XAU/USD) rebounded on Friday after hitting a one-and-a-half-week low during the Asian session, climbing above $…. However, sustained upward momentum remained elusive ahead of the closely watched US Nonfarm Payrolls (NFP) report, which could provide insights into the Federal Reserve's monetary policy stance and influence the US Dollar (USD). Despite safe-haven demand from geopolitical risks, including the ongoing Russia-Ukraine war and Middle East tensions, as well as softer risk sentiment tied to US President-elect Donald Trump's tariff concerns, gold remains on track for a second consecutive weekly decline. The USD remains subdued near multi-week lows, pressured by bets on a December Fed rate cut, with the CME FedWatch Tool reflecting a 70% probability of a 25-basis-point cut. Suppressed US Treasury yields and recent labour market data, such as the rise in Initial Jobless Claims, have further dampened USD demand, providing additional support to gold prices. Federal Reserve Chair Jerome Powell’s recent comments hinted at a potential pause in rate cuts, adding complexity to the outlook for non-yielding bullion. Investors now await the NFP report for clearer cues on the Fed’s policy path, which could shape the near-term trajectory of both gold and the USD.
From a technical perspective, gold's price action highlights a tug-of-war between bullish and bearish forces as it navigates key support and resistance levels. An intraday breakdown below the 50% Fibonacci level of $… on daily chart and this level could initially trigger bearish sentiment. However, a swift recovery from the level suggests caution among traders before committing to further declines. On the upside, resistance looms near $… and the $… zone, with a sustained break above last Friday's high of $… potentially paving the way for a rally toward the $… psychological mark. Conversely, immediate support is positioned around the $… region, with stronger defences at $…. A decisive break below the 100-day SMA at $… could expose the November swing low of $….
