Gold (XAU/USD) recovers most of its early intraday losses, trading with a mild negative bias near $4,070-$4,075 during the first half of Friday’s European session. The US Dollar (USD) extends Thursday's recovery from its lowest level since late September, exerting some downward pressure on the commodity. Furthermore, a hawkish US Federal Reserve (Fed) contributes to the precious metal pullback from a two-week high, which it touched the previous day. Bearish traders, however, seem hesitant ahead of the release of US monthly employment details, which should provide a fresh impetus to the precious metal.
The popularly known US Nonfarm Payrolls (NFP) report is anticipated to show that the economy added 65K new jobs in October, up from the previous month's softer reading of 29K. Meanwhile, the unemployment rate is forecast to hold steady at 4.2%. Apart from this, investors will pay close attention to Average Hourly Earnings, as wage growth pressures could heavily influence Federal Reserve (Fed) policy expectations. Nevertheless, the closely watched macroeconomic indicators are set to infuse some volatility in the financial markets and drive USD demand, providing some meaningful impetus to gold.
Meanwhile, a Democratic sweep in the US midterm elections sparked concerns of a slowdown in artificial intelligence development. This led to a bruising rout on Wall Street on Thursday and boosted demand for traditional safe-haven assets, like US government Treasuries. However, the sharp overnight recovery in crude oil prices reignited inflationary concerns. Moreover, traders are still pricing in around a 70% chance that the US central bank will raise borrowing costs again at its December meeting. This, in turn, helps limit the downside for US bond yields following the midweek slump and supports the Greenback.
Furthermore, the geopolitical risk premium remains in play amid the uncertainty over US President Donald Trump's next move. In fact, Trump said on Thursday that the US may have to destroy the rest of Iran and added that people will know soon enough if he acts. Moreover, the US and Iran remain divided over Tehran's nuclear program and the Strait of Hormuz. This offers additional support for the safe-haven buck, which is seen weighing on the Gold price. Nevertheless, the commodity seems poised to register gains for the first time in three weeks and holds comfortably above the $4,000 psychological mark.
XAU/USD 4-hour chart
Technical Analysis
The XAU/USD pair holds a constructive near-term tone above the Fibonacci cluster between the 50.0% retracement at $4,006 and the 38.2% level at $4,039. However, an intraday slide below the 100-period Exponential Moving Average (EMA) on the 4-hour chart warrants caution for bulls. Moreover, the Relative Strength Index (RSI) at 52.40 has eased from overbought territory and now points to neutral-to-bid momentum. That said, the Moving Average Convergence Divergence (MACD) indicator maintains a positive reading with the MACD line above zero and prior gains in the histogram hinting that bullish pressure is merely pausing rather than reversing.
Hence, some follow-through selling below the 38.2% Fibo. retracement at $4,039 is needed to back the case for further losses to a deeper floor at the 50.0% retracement near $4,006. A break under these levels would expose the 61.8% retracement at $3,973 and the 78.6% level at $3,926. On the topside, immediate resistance aligns at the 23.6% retracement at $4,080, and a sustained move above that would open the way toward the recent cycle high at $4,146.
