Gold Price Forecast: Is XAU/USD primed for a pullback on prelim NFP Benchmark Revision?

Gold keeps printing fresh record highs, tests $3,650 while adding over 1.5% so far this week.
US Dollar mires in seven-week lows across the board ahead of the Nonfarm Payrolls Benchmark Revision.
Bets for aggressive Fed rate cuts are back on the table after poor US jobs data.
Heavily overbought RSI on the daily chart warrants caution for buyers, a pullback in the offing?

Dhwani Mehta FXStreet

Gold is testing offers above $3,650 early Tuesday as the record run remains unabated amid a sustained bearish bias in the US Dollar (USD) and a slightly positive risk tone.

Gold keeps pushing north, but for how long?

The USD resumes its downtrend following a brief recovery in Monday’s Asian trading, sitting at the lowest level in seven weeks against its six major currency rivals.

Intensifying bets over aggressive interest rate cuts by the US Federal Reserve (Fed) this year, in the face of deteriorating labor market conditions and high stagflation risks, remain a drag on the Greenback.

The dovish Fed expectations and broad USD weakness continue to power the record rally in Gold, with the non-yielding bullion up nearly 1.8% so far this week.

The Bureau of Labor Statistics (BLS) showed Friday that the headline US Nonfarm Payrolls (NFP) increased by 22,000, far below forecasts of 75,000, while the Unemployment Rate climbed to 4.3%, the highest level since late 2021.

Markets are pricing in an 89.4% chance of a 25 basis points (bps) rate cut at the Fed's September meeting and a 10.6% probability of a jumbo 50 bps rate cut, according to the CME Group's FedWatch tool.

There are speculations that the Fed could deliver more than two rate cuts this year. That said, attention now turns to the preliminary US NFP Benchmark Revision due later in the day, which will cover the period from April 2024 to March 2025.

Economists are expecting a downward revision of as much as 800,000 jobs, which could signal that the Federal Reserve is lagging in its efforts to achieve maximum employment, per Reuters.

Gold could witness a ‘sell the fact’ trade if the NFP revision is downgraded as widely expected, with sellers finding additional support from the overbought conditions on the daily chart.

Gold price technical analysis: Daily chart

The daily chart shows that the 14-day Relative Strength Index (RSI) remains in a heavily overbought zone. The leading indicator is currently above 80.

Any pullback in Gold could challenge the immediate support located at the $3,600 round number, below which the previous day’s low of $3,578 could be tested.

A sustained break below the latter will open up a fresh downside toward the $3,550 psychological mark.

However, if buyers refuse to give up, the next topside barrier is seen at the $3,700 level, above which the $3,750 region could offer some resistance.

Economic Indicator

Nonfarm Payrolls Benchmark Revision

The US Bureau of Labor Statistics (BLS) announces the preliminary estimate of the annual benchmark revision to the establishment survey employment series, which can lead to a revision as well for the Nonfarm Payrolls data in the twelve months to March. This preliminary revision could have implications for employment figures for the rest of the year.

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

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The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.