Gold hangs near weekly lows, NFP awaited

Gold extended its sideways consolidative price action on Friday and remained well within the striking distance of weekly lows set in the previous session.

The de-escalation of geopolitical tensions in the Middle East remained supportive of the prevailing risk-on environment and was seen as one of the key factors weighing on traditional safe-haven assets, including gold.

The downside remains limited ahead of NFP

It is worth recalling that the prospect of war between the US and Iran became more unlikely after the US President Donald Trump on Wednesday signalled that there will be no further military action against the Islamic Republic.

Adding to this, the optimism over the US-China phase-one trade deal – expected to be signed next week – further boosted investors’ appetite for riskier assets and was evident from a positive tone around the global equity markets.

This coupled with some follow-through US dollar appreciation also played its part in exerting pressure on the dollar-denominated commodity. However, a mildly negative tone surrounding the US Treasury bond yields helped limit losses for the non-yielding yellow metal.

Apart from this, investors' reluctance to place any aggressive bets ahead of Friday's closely watched US monthly jobs report – popularly known as NFP – could also be cited as one of the factors lending some support to the commodity, at least for now.

Hence, it will be prudent to wait for some strong follow-through selling, possibly below the weekly lows support near the $1540 region, before positioning for an extension of the recent pullback from multi-year tops set on Wednesday.

Technical levels to watch