Gold Price Forecast: XAU/USD approaches $1,875 hurdle with eyes on US NFP

Gold Price (XAU/USD) dribbles around $1,870, after an uptick to refresh the one-month high during Friday’s initial Asian session, as the NFP-linked caution takes momentum away. Also challenging the gold prices could be the recently mixed headlines concerning China and a rebound in the US Treasury yields.

That said, the yellow metal rose the most in a fortnight the previous day after the US Dollar Index portrayed the biggest daily slump in two weeks. That said, softer US data and indecision among the Fed policymakers seemed to have triggered the US dollar’s pullback, as well as propelled the gold prices.

It’s worth noting that the early signal of Friday’s US Nonfarm Payrolls (NFP), namely the US ADP Employment Change eased to 128K for May, versus 300K forecasts and a downwardly revised 202K previous reading. The Weekly US Initial Jobless Claims, on the other hand, dropped to 200K compared to 210K anticipated and 211K prior. Further, Nonfarm Productivity and Unit Labor Costs both improved in Q1, to -7.3% and 12.6% respectively, compared to -7.5% and 11.6% figures for market consensus. Furthermore, US Factory Orders for April softened to 0.3%, from a revised 1.8% in March and 0.7% forecast.

Elsewhere, Federal Reserve Vice-Chair Lael Brainard and Cleveland Fed President Loretta Mester repeated the statements suggesting higher odds favoring the Fed’s aggression in rate hikes.

On a different page, “‘All options are on the table’ regarding tariff decisions on Chinese imports,” said Deputy US Trade Representative (USTR) Sarah Bianchi during a Reuters interview on Thursday. “USTR is seeking a 'strategic realignment' with China, tariff structure that 'makes sense',” added the diplomat.

While portraying the mood, the Wall Street benchmarks rose the most in a week whereas US Treasury yields remained pressured. At the latest, the S&P 500 Futures print mild gains but the US Treasury yields pause the previous fall around 2.92%, suggesting the market’s cautious optimism.

Moving on, gold traders will pay attention to the US jobs report for May, as well as ISM Services PMI for the said month, for fresh impulses.

Technical analysis

Gold buyers cheer a clear upside break of a five-week-old descending trend line to refresh a one-month high, with a tepid tick.

The upside momentum also gains support from firmer MACD and RSI, suggesting further advances towards the key $1,875-76 hurdle comprising a joint of the 50-day EMA and the 100-day EMA.

A clear run-up beyond the $1,875 will quickly propel the quote towards the $1,890 resistance level, including March’s low and 61.8% Fibonacci retracement of the January-March upside.

On the flip side, pullback moves need to stay beyond the previous resistance line, now support around $1,857, to keep gold buyers hopeful.

Should the quote drop below $1,857, the odds of witnessing a downside towards $1,820 and to the $1,800 threshold can’t be ruled out.

Gold: Daily chart

Trend: Further upside expected