Gold rises above $4,300 as traders brace for US Nonfarm Payrolls
Gold (XAU/USD) extends its recovery on Friday as technical buying accelerates, even as market sentiment remains cautious due to developments in the Middle East and uncertainty over the Federal Reserve’s (Fed) interest-rate outlook. Traders now await the US Nonfarm Payrolls (NFP) report, due at 12:30 GMT.
At the time of writing, XAU/USD trades around $4,322, climbing to a fresh seven-week high.
Economists expect the US economy to add 80K jobs in July, following a 57K increase in June, while the Unemployment Rate is forecast to remain unchanged at 4.2%.
The precious metal is heading for its strongest weekly rise since January, gaining more than 6% so far after breaking above the month-old $4,000-$4,200 range on Wednesday. The advance was initially fuelled by optimism that the Strait of Hormuz could reopen soon as Iran and Oman reportedly moved closer to an agreement on a proposed shipping route through the waterway.
The development pushed Oil prices sharply lower earlier in the week, easing concerns over energy-driven inflation and weighing on the US Dollar (USD) and US Treasury yields as traders scaled back bets on Fed interest rate hikes. Gold tends to perform well in a low-interest-rate environment, as it offers no yield.
According to the CME FedWatch Tool, markets currently see around a 55% probability of a rate hike at the September meeting, down from roughly 67% a week ago. The upcoming employment data could shift those expectations and determine whether Gold extends its advance or begins to lose momentum.
Nevertheless, energy-related inflation risks have diminished rather than disappeared, as Oil prices still carry a substantial geopolitical risk premium. Fars News reported on Friday that Iran had struck what it described as “hostile targets” in the Strait of Hormuz.
Meanwhile, the proposed Iran-Oman arrangement would not result in a complete reopening of the Strait. Tehran could collect transit fees under the framework and is also reviewing a bill that would bar US, Israeli and other hostile vessels from using the waterway.
Technical analysis: Daily chart
XAU/USD bounced back above the Bollinger Bands’ 20-period Simple Moving Average (SMA) at $4,084 and is now holding over the upper band at $4,256, hinting at firm underlying demand after the recent range-bound trade.
The Relative Strength Index (RSI) at 64 approaches overbought territory on the daily chart, and the Moving Average Convergence Divergence (MACD) histogram stays firmly positive, reinforcing bullish momentum.
On the topside, initial resistance is defined by the 100-day SMA at $4,390, and a sustained break above this barrier would open the way for a more decisive bullish continuation.
On the downside, immediate support is seen at the Bollinger upper band near $4,256, followed by the mid-line at $4,084, with a more solid floor at the horizontal level of $4,000.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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