Gold is holding just above its 200‑day moving average as traders await the US Nonfarm Payrolls report later on Friday.
The outcome could determine whether bullion breaks lower under the weight of hawkish Federal Reserve expectations or stages a rebound if the labor market shows signs of cooling.
FXStreet analyst Dhwani Mehta observed that XAU/USD reversed part of its rebound early Friday, trading near $4,450, with the 200‑day Simple Moving Average at $4,432 acting as a crucial support.
She pointed out that resistance levels remain stacked above at the 21‑day SMA ($4,551), 50‑day SMA ($4,629) and 100‑day SMA ($4,796).
The Relative Strength Index around 40 signals lingering downside pressure, while the MACD slipping below zero reinforces bearish momentum.
At the time of writing, the COMEX gold contract was at $4,470.60 per ounce, down 0.8%. Prices had climbed sharply in the previous session.
Geopolitical backdrop complicates sentiment
Middle East tensions continue to cloud the outlook. Hezbollah rejected a US‑brokered ceasefire plan between Lebanon and Israel, while Israeli officials vowed to press ahead with operations despite the truce.
US President Donald Trump suggested progress could be made on reopening the Strait of Hormuz, but markets remain skeptical.
The dollar index is consolidating in bullish territory, supported by strong economic data and hawkish Fed bets, which adds further headwinds for gold.
Gold is set for a weekly loss as rate hike fears and Middle East tensions pressured sentiment.
The report highlighted that investors remain wary of inflation risks, which could keep central banks cautious about easing policy.
Despite the recent rebound, gold remains well below its earlier peak and has been trading in a relatively narrow range in recent weeks.
“In the near term, gold will likely remain range-bound, with direction driven by US rates, the dollar, and inflation.”
NFP expectations and market reaction
Economists expect headline NFP to rise by 85,000 in May, down from 115,000 in April, with unemployment steady at 4.3%.
A stronger‑than‑expected print would underscore US economic resilience, bolstering Fed hawkishness and weighing on gold.
Conversely, a weak number could prompt markets to scale back rate hike bets, potentially triggering a bullish breakout.
NFP is the most closely watched US economic indicator. A high reading is typically USD‑positive and gold‑negative, while a low reading tends to weaken the dollar and support bullion.
Market reactions, however, depend on the full jobs report, including wage growth and participation rates.
Expert commentary on gold’s trajectory
The expert commentary added a historical perspective, noting that gold has often struggled in similar conditions.
Analysts argue that energy‑driven inflation and geopolitical shocks are complicating gold’s traditional safe‑haven role.
“Gold is thus continuing to behave contrary to its status as a safe haven asset,” said Commerzbank analyst Carsten Fritsch, pointing out that bullion has been moving inversely to oil prices as traders reassess Fed policy risks.
Technical scenarios
If gold breaks below the 200‑day SMA, losses could extend toward $4,350 and then $4,300.
On the other hand, if NFP disappoints, gold could reclaim resistance at $4,551, then $4,629, and potentially test $4,796.
Continued consolidation around the 200‑day SMA remains possible if neither side of the market gains conviction.
Markets are now turning to the US employment report due later today. Traders will weigh the headline jobs number against wage growth and participation rates to gauge the Fed’s policy direction.
With gold down about 16% since the Iran conflict began in late February, the data could prove decisive in shaping sentiment for the weeks ahead.
Gold is at a crossroads, balancing between geopolitical uncertainty and US economic resilience.
The NFP release will likely determine whether bullion breaks below its 200‑day SMA into deeper losses or stages a rebound toward higher resistance levels.
Investors should brace for heightened volatility, with both the jobs data and Middle East headlines poised to drive the next decisive move.
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