Gold Price Forecast: XAU/USD yearns for acceptance above $4,100 as US NFP looms
- Gold re-attempts $4,100 early Thursday, looking north ahead of US jobs data.
- US Dollar hangs close to ten-day highs as risk-on mood offsets hawkish Fed Minutes.
- Gold closed Wednesday above $4,075 resistance; RSI stays bullish. Where next?
Gold is attempting another stint above $4,100 early Thursday, as the US Dollar (USD) pauses its uptrend amid a risk-on market profile, while awaiting the all-important September Nonfarm Payrolls (NFP) report due later in the day.
Gold looks to US NFP data for next push higher
It’s all about the September US NFP data this Thursday, as it is the first full employment report after there was no official data released for over seven weeks due to the government shutdown.
Further, the data will be closely scrutinized for fresh cues on the US Federal Reserve’s (Fed) path forward on interest rates, especially after the Minutes of the October monetary policy meeting showed that “policymakers cautioned that lower borrowing costs could undermine the fight against inflation.”
Following the Minutes release, the odds for a December Fed rate cut declined to 33%, according to the CME Group’s FedWatch Tool, having seen around 50% before the event.
This hawkish narrative bolstered the USD rally, fuelling a sharp retracement in Gold from the highest level this week, reached at $4,133.
However, the tide once again seems to have turned in favor of Gold buyers after the upbeat results from the chipmaker Nvidia post-market hours provided a big relief and triggered a sharp risk-on rally across the board.
The market optimism extends into Asian trading, limiting the ongoing USD advance, while reviving Gold’s recovery momentum toward the $4,100 threshold.
The next leg higher in Gold depends on the release of the US jobs data, which could help alter market expectations on whether the Fed will lower rates next month.
The NFP data is expected to show that the US economy to have added 50,000 jobs in September, against a 22,000 job gain in August. The Unemployment Rate is seen steady at 4.3% in the same period. Meanwhile, the Average Hourly Earnings are expected to rise annually by 3.7% in September, at the same pace reported in August.
Any sharp deviations from the estimates could influence the Fed rate cut expectations, triggering a big move in Gold.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,097.44. The 21-day Simple Moving Average (SMA) has flattened near $4,048.53, while the 50-, 100- and 200-day SMAs continue to rise, underpinning the broader uptrend. Price holds above all these gauges, keeping a mild bullish bias despite slower near-term momentum. The Relative Strength Index (14) prints 54.66, neutral with a modest positive tilt.
Measured from the $4,381.17 high to the $3,885.84 low, the 38.2% retracement at $4,075.05 and the 50% retracement at $4,133.50 frame the ongoing rebound within a corrective structure. A daily close above the upper retracement would open the next leg higher, whereas failure to sustain gains and a slip beneath the lower marker would put the pullback back in play.
(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.
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.
