Gold price retreats after peaking at $4,106, drifting lower nearly 1% on Friday as the US employment report crushed forecasts and increased the chances that the Federal Reserve (Fed) could increase rates at the December meeting. The XAU/USD trades at $4,060 at the time of writing.
XAU/USD reverses course on strong US jobs data; eyes on next week’s US CPI
Sentiment remains positive as investors bought the dip in US equities with October Nonfarm Payrolls (NFP) hurdling forecasts at 65K to reach 165K. NFP figures from a month ago were upwardly revised from 29K to 60K as well. Consequently, the Unemployment Rate dipped from 4.2% to 4.1% as employers added jobs across a broad range of sectors.
This US jobs data and an upbeat US Consumer Sentiment report from the University of Michigan show that the economy remains resilient despite volatility in energy prices. November’s Consumer Sentiment Index edged up from 48 in October to 51, while inflation expectations for one year cooled from 4.7% to 4.3%.
The US Dollar Index (DXY), which tracks the performance of the buck against a basket of six currencies, is up 0.62% above the 102.00 threshold, a level reclaimed after the NFP report.
Investors had increased their hawkish bets that the Federal Reserve (Fed) will hike at the December meeting, with odds edging up from 67% on Thursday to 77%, according to the CME FedWatch Tool.
St. Louis Fed President Alberto Musalem said that “people remain concerned about inflation at the current level,” adding that inflation expectations remain anchored and that current excess inflation is due to energy shocks and the AI buildout.
Despite this, US Treasury yields retreated from intraday highs with the 10-year T-note yielding 4.840%, up 0.1%.
In the meantime, negotiations between the US and Iran continued, with newswires reporting that there’s a chance of an agreement. However, the Houthis continued their attack on Saudi Arabia.
Despite ongoing talks, reports say Tehran is preparing for a possible escalation. Al Arabiya, citing Israeli press, reported that “America is planning an intensive and rapid operation against Iran to reach a nuclear agreement on better terms.”
Aside from this, Gold traders’ eyes are on next week's US inflation figures, jobless claims, and Fed officials' comments.
XAU/USD technical outlook: Gold struggles at $4,100 and retreats
Gold prices have retreated after hitting a weekly high of $4,146 on Thursday. Since then, XAU/USD has fallen below $4,100, with the bias remaining unclear but tilted to the downside. Momentum has shifted bearish with the Relative Strength Index (RSI) making a U-turn near its neutral level. Therefore, the yellow metal is expected to end the week near familiar levels, within the $4,050-$4,150 range, as it eyes next week’s US inflation data.
For a bullish continuation, the non-yielding metal must clear the confluence of the 100-day and 50-day Simple Moving Averages (SMAs), at $4,197 and $4,202, respectively. Once done, this opens the door to challenge $4,300.
If sellers want to regain control, Gold must fall below 4,000. A breach of the latter could exacerbate the downtrend with the next key support levels seen at the November 4 daily low at $3,919, followed by the October 30 year-to-date low at $3,879.
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