Gold Price Forecast: XAU/USD extends the range play as traders keenly await US NFP

Gold price (XAU/USD) continues with its struggle to gain meaningful traction on Friday and remains confined in the weekly range through the early European session. Traders seem reluctant to place aggressive directional bets and opt to wait on the sidelines ahead of the release of the closely watched US monthly employment details, leading to the subdued price action. The popularly known Nonfarm Payrolls (NFP) report will be looked upon for cues about the Federal Reserve's (Fed) rate cut path, which, in turn, will play a key role in influencing the near-term trajectory for the non-yielding yellow metal.

In the meantime, growing acceptance that the US central bank will keep interest rates higher for longer amid still sticky inflation is seen undermining demand for the non-yielding Gold price. Apart from this, the risk-on mood – as depicted by a generally positive tone around the equity markets – might continue to act as a headwind for the safe-haven precious metal. The downside, however, remains cushioned in the wake of the post-FOMC US Dollar (USD) selling bias, which is likely to benefit the USD-denominated commodity and hold back traders from placing aggressive bearish bets around the XAU/USD. 

Fed Chair Jerome Powell, addressing the post-meeting press conference on Wednesday, acknowledged that the progress towards the 2% annual inflation target had largely stalled, though ruled out the possibility of any further rate hikes. This drags the USD lower for the third straight day, to a three-week low, which could offer some support to the Gold price. Hence, it will be prudent to wait for strong follow-through selling before positioning for an extension of the commodity's pullback from the all-time peak touched in April Nevertheless, the XAU/USD remains on track to register losses for the second straight week.

Technical Outlook

From a technical perspective, the range-bound price action witnessed since the beginning of the current week constitutes the formation of a rectangle on short-term charts and points to a consolidation phase. Moreover, neutral oscillators on the daily chart warrant some caution before placing aggressive directional bets around the Gold price. Hence, any further weakness below the $2,300 mark might continue to find support near the lower end of the weekly range, around the $2,285-2,280 area. A convincing break should pave the way for deeper losses and drag the XAU/USD towards the next relevant support near the $2,268-2,265 area en route to the $2,230-2,25 region and the $2,200 round figure.

On the flip side, the $2,326-2,328 area now seems to act as an immediate hurdle ahead of the $2,335 supply zone and the weekly top, around the $2,346-2,347 region. A sustained strength beyond the latter will confirm a fresh breakout through the short-term trading range and pave the way for a move towards the $2,371-2,372 resistance. The Gold price could extend the momentum further towards the $2,400 mark before aiming to challenge the all-time peak, around the $2,431-2,432 area touched on April 12.