Gold struggles to lure buyers amid bullish USD; eye US NFP for Fed rate cues

Gold remains confined in a range as traders opt to wait for the release of the US NFP report.
The USD stands firm near a one-and-a-half-year top, acting as a headwind for the commodity.
Oil-driven inflation fears keep US bond yields near multi-year highs, further capping the bullion.

Gold (XAU/USD) attracts some sellers during the Asian session on Friday, though the downside remains limited as traders opt to wait for the crucial US employment details before placing fresh directional bets. The popularly known US Nonfarm Payrolls (NFP) report is expected to show that the economy added only 90K jobs in September, compared to the previous month's reading of 162K. Meanwhile, the Unemployment Rate is seen holding steady at 4.1%. Furthermore, the annual wage inflation, as measured by the change in the Average Hourly Earnings, will be looked upon for more cues about the Federal Reserve's (Fed) future policy path amid receding October rate hike bets. This, in turn, will drive the US Dollar (USD) and provide some meaningful impetus to the non-yielding bullion.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

A slew of influential FOMC members recently indicated that they do not see an urgent need for an immediate interest rate hike after the widely expected quarter-point increase at the September meeting. Meanwhile, the Institute for Supply Management (ISM) reported on Thursday that economic activity in the US manufacturing sector expanded for the ninth straight month in September. Additional details of the survey revealed that raw material prices increased for a 24th consecutive month. This comes on top of inflationary concerns stemming from volatile energy prices, which underpin prospects for additional Fed tightening and help limit the overnight pullback in US bond yields from multi-year highs. Apart from this, the US-Iran standoff keeps the USD firm near its highest level since April 2025.

The Wall Street Journal reported that the Pentagon may soon send a third aircraft carrier strike group and 10,000 sailors and Marines to the Persian Gulf. Separately, Iran’s Persian Gulf Strait Authority (PGSA) said several tankers were attacked in the Strait of Hormuz in recent days. Adding to this, US President Donald Trump said on Wednesday that he would decide very soon whether to blow up Iran and added that the war will end very soon one way or the other. This keeps the geopolitical risk premium firmly in play and remains supportive of the strong bid tone surrounding the safe-haven Greenback, which might continue to act as a headwind for the Gold. That said, the lack of follow-through selling warrants some caution for XAU/USD bears before positioning for any meaningful depreciation.

XAU/USD 4-hour chart

Technical Analysis

The XAU/USD pair keeps a bearish near-term tone below the 200-period Simple Moving Average (SMA) on the 4-hour chart and the mid-range Fibonacci retracements. However, the Moving Average Convergence Divergence (MACD) indicator remains in positive territory with the line above its signal and a still-constructive histogram. Meanwhile, the Relative Strength Index (RSI) around 43 hints at a potential pause in the downside rather than a clear bullish reversal.

Hence, any positive move beyond the $4,200 mark is more likely to confront immediate resistance near the 61.8% retracement at $4,230. The 50% level at $4,319 forms the next nearby topside barrier ahead of the 200-period SMA at $4,386 and the 38.2% retracement at $4,408. This reinforces a dense supply zone, with the 23.6% retracement at $4,519 marking a more distant cap that would need to be reclaimed to meaningfully challenge the current bearish bias. On the downside, initial support is seen at the 78.6% Fibo. retracement at $4,103, ahead of the prior swing low near $3,942.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Nonfarm Payrolls FAQs

What are Nonfarm Payrolls?

Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.

How does Nonfarm Payrolls influence the Federal Reserve monetary policy decisions?

The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.

How does Nonfarm Payrolls affect the US Dollar?

Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.

How does Nonfarm Payrolls affect Gold?

Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.

Sometimes Nonfarm Payrolls trigger an opposite reaction than what the market expects. Why is that?

Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.

Susunod na Artikulo