Gold Price Forecast: Will XAU/USD defend 21DMA support on US Nonfarm Payrolls?

Gold price is holding steady above the $1,900 mark, as sellers take a breather after a sharp pullback from ten-month highs of $1,960. A sesne of calm prevails in Fridya’s tradiung so far, as investors stay on the sidelines and assess the latest central banks’ policy decisions and its market impact going forward. All eyes now turn toward the United States Nonfarm Payrolls (NFP) data release for fresh tading impetus in Gold price.

United States Nonfarm Payrolls data in focus

After two days of intense volatility, Gold price is treading water at lower levels, awaiting the next key United States event, in the Nonfarm Payrolls for further clarity on the US Federal Reserve (Fed) future policy course. The headline US Nonfarm Payrolls are seen dropping to 185K in January vs. 223K previous while the Unemployment Rate is expected to inch higher to 3.6% vs. 3.5% seen in December.

A weaker-than-expected US NFP print is likely to bolster the dovish ‘Fed pivot’ expectations, triggering a risk rally at the expense of the US Dollar. In such a scenario, Gold price could receive the much-needed boost to resune its northward trajectory. Aside from the US labor market report, Gold traders will also look forward to the United States S&P Global and ISM Services PMI data.

Dovish Bank of England and European Central Bank revived US Dollar

After the US Federal Reserve came out dovish on its policy outlook on Wednesday, the Bank of England and the European Central Bank also followed the dovish track, which downed the Pound Sterling and the Euro, helping the United States Dollar recover from the grave. The US Dollar staged a solid comeback from ten-month lows across its major peers, further helped by the disappointing earnings reports from the American tech giants, Apple Inc., Amazon.com Inc. and Google parent Alphabet Inc, which triggered broad risk aversion. Meanwhile, the US Treasury bond yields face a double whammy, as risk-off flows dominate while traders weigh the dovish Federal Reserve policy outlook. Gold price, therefore, could find some support if the Treasury bond yields sell-off extends.

Gold price technical analysis: Daily chart

Gold price is defending the critical short-term ascending 21-Daily Moving Average (DMA) at $1,914, at the moment, keeping buyers hopeful.

A failure to defend the latter will trigger a fresh drop toward the $1,900 mark. A sustained move below the latter will open the floor toward the bullish 50DMA at $1,847.

The 14-day Relative Strength Index (RSI) is inching higher above the midline, suggesting a tepid recovery remains in the offing for the Gold price.

Gold price needs to recapture the $1,920 round figure to extend the rebound toward the $1,934-$1,935 supply zone.

Should the recovery gather steam, the multi-month highs of $1,960 will be back on Gold bulls’ radars.