- Gold oscillates in a narrow band through the first half of the European session on Friday.
- Aggressive Fed rate hike bets, elevated US bond yields continue to act as a headwind.
- Recession fears and the risk-off mood offer some support amid a modest USD downtick.
- Investors keenly await the US monthly employment data for a fresh directional impetus.
Gold struggles to gain any meaningful traction on Friday and seesaws between tepid gains/minor losses through the first half of the European session. The XAU/USD, however, manages to hold above the $1,700 mark as traders keenly await the closely-watched US monthly employment details for a fresh impetus.
The popularly known NFP report is scheduled for release later during the early North American session and will play a key role in influencing Federal Reserve's rate hike plans. In fact, the markets seem convinced that the US central bank will tighten its monetary policy at a faster pace to curb inflation and have been pricing in another supersized 75 bps increase in November. Hence, the key labour market report will help to determine the next leg of a directional move for gold.
In the meantime, hawkish Fed expectations remain supportive of elevated US Treasury bond yields and continue to act as a headwind for the non-yielding yellow metal. That said, a modest USD pullback from the vicinity of the weekly high is seen offering support to the dollar-denominated gold. Apart from this, the prevalent risk-off mood - amid growing worries about a deeper global economic downturn - further contributes to limiting the downside for the safe-haven precious metal.
The market sentiment remains fragile amid concerns about economic headwinds stemming from rapidly rising borrowing costs. Furthermore, the risk of a further escalation in the Russia-Ukraine conflict has been fueling recession fears and tempering investors' appetite for perceived riskier assets. Heading into the key event risk, the mixed fundamental backdrop holds back traders from placing aggressive bets around gold and leads to subdued/range-bound price action on the last day of the week.
Technical levels to watch
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