Gold Price Forecast: US Nonfarm Payrolls holds the key to XAU/USD’s next big move
- Gold returns to red near $4,150 on NFP Friday, confined within this week’s range.
- US Dollar sits at 17-month highs as elevated Treasury yields offset the Fed’s dovish repricing.
- Gold keeps its struggle below $4,200 amid a daily bearish RSI, while $4,100 holds.
Gold has returned to the red zone in Asia on Friday after failing several attempts to regain $4,200. Traders now eagerly await the US Nonfarm Payrolls (NFP) data for September, which could significantly alter market expectations for an October Federal Reserve (Fed) interest rate hike, having a major bearing on the US Dollar (USD) valuation and Gold’s next major move.
Gold: All eyes on US NFP data for Fed policy signals
In the lead-up to the critical US labor market report, Gold has entered a bearish consolidation phase, shuffling between the $4,200-$4,100 range so far this week.
The non-yielding bullion is torn between energy-driven inflation risks that have sent US Treasury bond yields to multi-year highs, and receding bets on another rate hike this month along with recent dovish commentary from two key Fed policymakers.
The benchmark US 10-year Treasuries touched 5.344% on Thursday, their highest since 2002, and are currently trading near 5.25%.
Soaring global yields, a flight-to-safety bid, and broad weakness in the Euro (EUR) have helped the US Dollar (USD) perch at 17-month highs against its six major peers, limiting any upside attempts in the USD-sensitive Gold.
However, markets now price in just a 25% chance that the Fed will hike rates later this month, down sharply from about 70% seen at the start of this week, according to the CME Group’s FedWatch Tool. This dovish Fed repricing is helping Gold check the downside.
That being said, the next clear directional move in Gold hinges on the upcoming top-tier US NFP release. Markets expect the headline NFP to increase by around 90,000 in September, following an impressive 162,000 gain in August.
However, focusing just on the headline NFP print could catch traders on the wrong foot, as the number could be distorted by seasonal factors such as government hiring, etc.
Also, with persistent inflationary risks, Average Hourly Earnings could also hog the limelight to determine whether wage growth has accelerated or slowed sharply.
Hence, traders will likely focus on these two potential scenarios for trading Gold on the NFP release.
First, the bearish case: If NFP beats 100,000, with unemployment near 4.1% and wages up 0.3% or higher, markets could revive October Fed hike bets, supporting the US and Treasury yields at the expense of Gold.
Bullish scenario: But if payrolls fall below 50,000, unemployment rises toward 4.2%, and wage growth slows, an October hike could be off the table, weighing on the USD and yields and potentially triggering a Gold rebound.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,172.49, maintaining a bearish near-term tone as it holds beneath the 50-day simple moving average (SMA) at $4,327.30, the 100-day SMA at $4,279.39 and the 200-day SMA at $4,534.92. The clustering of these key averages above price suggests gold remains capped after its recent retreat, while the Relative Strength Index (14) around 40 hints at subdued momentum rather than an oversold extreme.
On the downside, immediate support is located at the prior close area near $4,172, with a more meaningful structural floor at the upward-sloping trend-line support around $3,999. On the topside, initial resistance aligns with the 100-day SMA at $4,279, followed by the 50-day SMA at $4,327, while the 200-day SMA at $4,535 forms a higher barrier that would need to be reclaimed to negate the current bearish bias.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Nonfarm Payrolls
The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.
Read more.Next release: Fri Oct 02, 2026 12:30
Frequency: Monthly
Consensus: 90K
Previous: 162K
Source: US Bureau of Labor Statistics
America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
