Gold Price Forecast: Will XAU/USD break above 100 DMA at $1,955 on weak US Nonfarm Payrolls?

Gold price is trading close to one-month highs, kicking off a new month on the right footing early Friday. The United States Dollar (USD) is consolidating the previous day’s short-covering rally, as investors look forward to the all-important US Nonfarm Payrolls data for cementing expectations of a US Federal Reserve (Fed) rate hike pause for this year.

All eyes on the US jobs report

Gold price witnessed good two-way businesses but ended the final day of the month in the red, as the US Dollar staged an impressive rebound, despite the persistent weakness in the US Treasury bond yields. Risk sentiment turned tepid in American trading, as traders resorted to the end-of-the-month settlement while repositioning ahead of Friday’s high-impact US labor market report.

Earlier in the day, the US Dollar maintained its corrective downside, as the mixed set of economic data from the United States bolstered expectations that the Fed could likely end its tightening cycle. The Fed's preferred measure of inflation showed prices rose 4.2% YoY last month, in line with the expectations, though slightly higher than the 4.1% price acceleration recorded in June. The number of Americans applying for jobless benefits last fell week by 4,000, to 228,000 the week ending August 26. However, the US Personal Income rose less than expected in the reported month.

In an immediate reaction to the US dataflow, Gold price jumped to challenge the monthly high of $1,949, although failed to sustain at higher levels on the US Dollar comeback.

Attention now turns toward the main event riak of the week, the US Nonfarm Payrolls and the Average Hourly Earnings data, which will likely hint at the Fed’s policy path for the rest of this year. The US economy is expected to add 170K jobs in August, compared with the 187K previous job gain. Average Hourly Earnings are seen steady at 4.4% YoY in August.

Gold price technical analysis: Daily chart

Gold price could gain fresh upside traction and yield a firm break above the critical 100-Daily Moving Averages (DMA) at $1,955 should the headline NFP figure fall short of the market expectations and the wage inflation data surprise to the downside.

Further up, the static resistance at $1,970, above which doors will open up towards the $2,000 mark.

The 14-day Relative Strength Index (RSI) is edging lower but remains well above the midline, suggesting that there is more room for the upside. 

Conversely, a strong US jobs report could provide an extra leg to the retreat in Gold price, with Wednesday’s low of $1,935 emerging as the initial support for Gold price.

The 50 DMA resistance-turned-support of $1,931 will be next on Gold sellers’ radar. A sustained move below the lower will open up a fresh downswing toward the $1,915 level, which is the intersection of the 21 and 200 DMAs.