Gold Price Forecast: XAU/USD to retest 100 DMA support on strong US Nonfarm Payrolls

Gold price is consolidating the previous rebound near the $1,830 level in Friday trading, thus far. Gold bulls are taking a breather, as they turn cautious ahead of the all-important United States Nonfarm Payrolls (NFP) data release.

All eyes on United States Nonfarm Payrolls (NFP)

Economists are expecting the United States economy to add 205K jobs in February when compared to the stunner 517K job gains seen in January. The Average Hourly Earnings are seen higher at 4.7% YoY in February vs. 4.4% previous. The US Unemployment Rate is likely to hold steady at 3.4% in the reported month.

Another upside surprise in the headline Nonfarm Payrolls print cannot be ruled out after Wednesday’s ADP Employment Change data from the United States came in at 242K vs. 200K expected and 119K previous. Further, the fact that the US labor market remains tight cannot be ignored.

In case, the US NFP blows past expectations, the US Dollar could receive a much-needed boost to resume the uptrend against its major rivals, throwing Gold price back into the hands of bears. The focus will be also on Wage growth, especially with the US Consumer Price Index (CPI) running hot and bolstering expectations of aggressive Federal Reserve tightening.

Disappointing US Jobless Claims help Gold price rebound

After hawkish testimony from the US Federal Reserve (Fed) Chairman Jerome Powell, earlier this week, odds of a 50 basis points (bps) March rate hike stood almost above 70% while markets priced in the Federal Reserve terminal rate higher to near 6.0%. Hawkish Fed bets spurred the Gold price sell-off, with the bright metal hitting its lowest in six days at $1,809.

Although Gold bulls jumped in on Thursday, as the US Dollar extended its corrective downside along with the US Treasury bond yields after the United States weekly Jobless Claims jumped to the highest in five months. Initial claims for unemployment benefits rose 21,000 to a seasonally adjusted 211,000 for the week ended March 4, the Labor Department said on Thursday, registering the largest increase since October and lifting claims to a two-month high.

Additionally, investors resorted to positions readjustment ahead of Friday’s key US labor market report, which also collaborated with the downside in the US Dollar and the US Treasury bond yields. At the time of writing, the US Dollar Index is dropping 0.15% on the day to trade around 105.55 while the benchmark US 10-year Treasury bond yields are trading at around 3.87%, down 1.35% on the day. Meanwhile, Gold price is trading little changed on the day at $1,831.

Gold price technical analysis: Daily chart

Gold price rebounded firmly on Thursday, as bulls tried their last chance for any reversal. However, the bearish 21-Daily Moving Average (DMA) at $1,835 came to the rescue of Gold sellers.

At the moment, Gold price is struggling near the latter, awaiting a sustained move above the 21 DMA barrier.

With the 14-day Relative Strength Index (RSI) still lying beneath the midline, risks remain skewed to the downside for Gold price.

Therefore, strong United States Nonfarm Payrolls could reinforce bearish bets on Gold price, smashing rates back toward the critical 100 DMA support at $1,810.

Ahead of that, the March 8 high at $1,824 could offer some respite to Gold buyers. A sustained break below the bullish 100 DMA cap could initiate a fresh downswing toward the flattish 200 DMA at $1,775.

On the flip side, the Gold price is likely to firmly recapture the 21 DMA resistance on a disappointing US labor market report, which could push back against expectations of bigger Fed rate increases.

Further up, Gold price could challenge the $1,850 psychological mark, with eyes on the weekly top at $1,858.