Gold Price Forecast: XAU/USD awaits US Nonfarm Payrolls for a clear directional impetus
- Gold rebounds above $5,100 early Friday after testing the $5,050 level amid global sell-off.
- The US Dollar pulls back as profit-taking creeps in ahead of US labor data. For February.
- 21-day SMA holds amid bullish RSI; a daily closing above 61.8% Fibo is critical for Gold buyers.
Gold is staging a decent comeback above $5,100 early Friday, awaiting the all-important US Nonfarm Payrolls (NFP) data for the next big directional move.
Gold eyes US NFP amid USD profit-taking
Gold is firming up once again above $5,100, seeing fresh signs of life in the face of renewed US Dollar weakness, spurred by a bout of profit-taking before the critical US jobs data.
A modest pullback in Oil prices, following the Trump administration’s assurance that they are weighing a range of options for addressing the spike in oil and gasoline prices amid the war in Iran, is also supporting the Gold price recovery early Friday.
Oil prices resumed their upsurge on Thursday, triggering a ‘sell-everything’ wave on fears of a resurgence in inflation and its impact on the global economy. The US Dollar emerged as the top performer as investors resorted to safety in the world’s reserve currency, which dampened Gold’s demand as a safe-haven asset.
The Greenback also derived strength from renewed hawkish expectations surrounding the US Federal Reserve (Fed) monetary policy outlook amid concerns over higher inflation. The US Treasury bond yields also rallied alongside. Gold thrives in a low-interest-rate environment.
Looking ahead, it seems that Gold awaits the February US employment data, especially the headline NFP reading, for a sustained break in either direction. Despite the bombings in the Middle East, Gold has failed to capitalize on the safe-haven demand so far.
Economists expect the US NFP to rise by about 60,000 in February, following an increase of 130,000 in January. The Unemployment Rate is set to hold steady at 4.3% in the reported period.
A reading below 50,000 could revive dovish Fed expectations, providing the much-needed boost to the non-yielding Gold.
On the contrary, an upside in the headline NFP print could advocate the case for less than two Fed rate cuts later this year or even prompt markets to price out a rate reduction, which could weigh heavily on the bright metal.
However, the reaction to the NFP release could be countered by fresh war headlines from the Middle East, with markets seeing no signs of easing as yet.
“US Defense Secretary Pete Hegseth and Admiral Brad Cooper, who leads U.S. forces in the Middle East, said that the US has enough munitions to continue its bombardment indefinitely,” per Reuters.
Gold price technical analysis: Daily chart
The near-term bias stays mildly bullish as price holds above the 21-day Simple Moving Average (SMA) at $5,087 and well above the 50-, 100- and 200-day SMAs, which continue to slope higher and reinforce the broader uptrend. The latest Relative Strength Index (RSI) reading near 54 remains neutral but above the midline, suggesting steady, rather than stretched, upside momentum after the recent consolidation off April’s peak. Measured from the $4,402 low to the $5,598 high, gold is oscillating around the 61.8% Fibonacci retracement at $5,141, indicating an ongoing attempt by buyers to defend this key pullback level within the prevailing bullish structure.
Initial resistance emerges at the 61.8% retracement at $5,141, with the 21-day SMA near $5,087 reinforcing a nearby demand area; a daily close below this band would expose the 50% retracement at $5,000, where dip-buying interest would be tested. Below there, the 38.2% retracement at $4,859 marks the next downside level before the broader trend base around $4,684. On the upside, the next resistance aligns with last week’s highs near $5,235, followed by the 78.6% retracement at $5,342. A break above this barrier would open the path toward a retest of the $5,598 record area and reassert the dominant bullish trend.
(The technical analysis of this story was written with the help of an AI tool.)
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.
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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.
