Gold Price Forecast: XAU/USD approaches $1,805-07 resistance with eyes on US NFP

Gold price (XAU/USD) grinds higher around $1,795 during Friday’s Asian session, after refreshing the monthly top the previous day. The metal marked the biggest daily gains in five months on Thursday amid a softer US dollar and the rush to risk safety amid recession fears.

That said, the US Dollar Index (DXY) reversed from the weekly top to print the biggest daily fall since July 27, pressured around 105.80 at the latest, amid downbeat US Treasury yields.

The US Treasury yields continued to portray the risk of recession as the difference between the 10-year and 2-year bond coupons remain the widest since 2000. That said, the US 10-year Treasury yields closed near 2.069% while the 2-year counterpart dropped to 3.049% at the latest.

Further, the Bank of England’s (BOE) open acceptance of the economic slowdown in late 2022 amplified the fears. On the same line was Cleveland Fed President Loretta Mester who said that recession risks have increased in the US.

Talking about the data, the US Initial Jobless Claims rose to 260K for the week ended on July 30 versus 254K prior and 259K expected. Further, job cuts eased and German Factory Orders improved while the US Goods and Services Trade Balance improved to $-79.6B versus $-80.1B market consensus and $-84.9B revised prior. Despite the mixed data, the market players remained hopeful of the Fed’s aggression but that couldn’t lift the US dollar amid fears of recession.

Amid these plays, Wall Street closed mixed and the S&P 500 Futures remain directionless at the latest.

Looking forward, gold traders may wait for the US Nonfarm Payrolls (NFP) for July, expected 250K versus 372K prior, for clear directions as recession fears jostle with the Fed’s aggression. Even so, the softer US dollar is likely to keep XAU/USD buyers hopeful.

Technical analysis

Gold price marked the first daily closing beyond the 50-DMA, around $1,789 by the press time, since late April on Thursday. The DMA breakout also gained support from the upbeat RSI (14) and the bullish MACD.

With this, XAU/USD bulls are all set to challenge the area comprising multiple lows marked since May, around $1,805-07. However, a downward sloping resistance line from April 29, near $1,830 at the latest, could restrict the metal’s further advances.

Following that, the 50% and 61.8% Fibonacci retracements of April-July downside, close to $1,840 and $1,877 in that order, might lure the gold buyers.

Meanwhile, pullback moves remain elusive until the quote stays beyond the two-week-old support line, at $1,868.

Even if the gold price declines below the $1,868 support line, the 21-DMA level near $1,838 could challenge the bears.

Gold: Daily chart

Trend: Further upside expected