Gold Forecast: US employment data to trigger next big action in XAU/USD

Gold closed the week in negative territory despite a late rebound.
The technical outlook points to sellers’ hesitancy in the near term.
Key employment data from the US and geopolitical headlines could continue to impact Gold prices.

Gold (XAU/USD) declined sharply on easing geopolitical concerns on Monday and spent the rest of the week trying to recover its losses. Employment-related macroeconomic data releases from the US could alter the expectations about the Federal Reserve’s policy decision in December and trigger the next big action in XAU/USD.

Gold suffers heavy losses on improving risk mood

Gold started the week under heavy bearish pressure as risk flows dominated the action in financial markets following the news of US President-elect Donald Trump nominating fund manager Scott Bessent as the US Treasury Secretary. Assessing the market reaction to this development, "the market view that Bessent is a “safe hands” candidate, may see some relief rally in Treasuries from the open on Monday, as the risk of a more unorthodox candidate is priced out," noted Societe Generale analyst Stephen Spratt. "We suspect his view that tariffs should be "layered" and that initial levels being discussed are “maximalist” positions," he added.

Although the selling pressure surrounding the US Dollar (USD) and falling US Treasury bond yields helped Gold limit its losses during the European trading hours, easing geopolitical tensions caused XAU/USD to continue to push lower in the second half of the day on Monday. Following reports of Israel and Hezbollah reaching a ceasefire agreement, Gold extended its slide and lost nearly 3% on a daily basis.

After stretching lower toward $2,600 early Tuesday, Gold managed to find a foothold and closed the day marginally higher. As the benchmark 10-year US Treasury bond yield dropped to its lowest level in nearly a month below 4.3% on Wednesday, Gold continued to edge higher and posted gains for the second consecutive day.

Meanwhile, the persistent weakness of the USD following the mixed macroeconomic data releases helped XAU/USD hold its ground midweek. The US Census Bureau reported that Durable Goods Orders increased by 0.2% on a monthly basis in October, missing the market expectation of 0.5%. The Department of Labor announced that Initial Jobless Claims declined to 213,000 in the week ending November 23 from 215,000 in the previous week. Finally, the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) preferred gauge of inflation, rose 2.3% on a yearly basis, up from 2.1% in September and in line with the market consensus, while the annual core PCE inflation edged higher to 2.8% from 2.7%.

Financial markets in the US remained closed in observance of the Thanksgiving Day holiday on Thursday, causing Gold to fluctuate in a tight range. The 10-year yield extended its weekly slide after bond markets returned to action early Friday, allowing XAU/USD to gather bullish momentum and rise above $2,650.

Gold investors’ shift focus to US labor market data

The US economic calendar will feature employment-related macroeconomic data releases next week, which could drive the market pricing of the Fed’s rate decision at the last policy meeting of the year.

On Wednesday, Automatic Data Processing will publish the private sector employment data. Markets expect private payrolls to rise by 166,000 in November. A positive surprise in this data could revive optimism about an upbeat Nonfarm Payrolls (NFP) reading on Friday and cause Gold to edge lower.

Following the 12,000 increase recorded in NFP in October, because of hurricanes and labor strikes, investors forecast a decisive rebound, with a print of 183,000 in November. A figure above 200,000 could feed into expectations for a Fed policy hold in December and boost US T-bond yields, hurting Gold prices. On the flip side, a disappointing print, at or below 150,000, could keep the hopes for another 25 basis points (bps) rate cut alive, opening the door for a leg higher in XAU/USD ahead of the weekend.

According to the CME FedWatch Tool, markets are currently seeing about a 65% probability of the Fed lowering the policy rate to the range of 4.25%-4.5% next month.

Gold technical outlook

The Relative Strength Index (RSI) indicator on the daily chart stays slightly above 50, reflecting a lack of bearish pressure. On the upside, the Fibonacci 23.6% of the uptrend coming from June and the 50-day Simple Moving Average (SMA) form the first resistance area at $2,670. In case Gold rises above this level and starts using it as support, technical buyers could show interest. In this scenario, $2,700 (static level, round level) could be seen as the next hurdle before $2,720 (static level) and $2,760 (static level).

Looking south, first support could be spotted at $2,600 (Fibonacci 38.2% retracement) ahead of $2,570 (100-day SMA) and $2,540 (Fibonacci 50% retracement).

Gold FAQs

Why do people invest in Gold?

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Who buys the most Gold?

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

How is Gold correlated with other assets?

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

What does the price of Gold depend on?

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

Share: Analysis feed

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.