XAU/USD Forecast: Gold Holds Above $4,000 Ahead of US NFP Data

Gold prices (XAU/USD) traded under pressure on Friday, dipping below the $4,050 level during the Asian session before recovering into Thursday's trading range. The initial decline was prompted by a modest rebound in the US Dollar Index (DXY), which recovered from its lowest level since late September. However, further downside momentum remained limited as market participants held off on establishing large directional positions ahead of crucial US employment data.

Macroeconomic Focus: US Nonfarm Payrolls

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Traders are awaiting the October US Nonfarm Payrolls (NFP) report, which is expected to show an addition of 65,000 jobs, up from 29,000 in the prior month. The unemployment rate is projected to hold steady at 4.2%. Attention will also center on average hourly earnings, as wage growth trends remain a key driver for Federal Reserve policy expectations. The report's outcome is likely to trigger heightened market volatility and dictate near-term direction for the dollar and gold.

Fed Expectations and Geopolitical Dynamics

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Broader market sentiment reflects mixed drivers following the US midterm elections, where a Democratic victory sparked concerns over slowing growth in the artificial intelligence sector and pressured Wall Street equities. While safe-haven demand initially boosted US Treasury bonds, a sharp rebound in oil prices renewed inflation concerns. Concurrently, futures markets continue to price in an approximately 70% probability of a Fed rate hike in December, underpinning Treasury yields and providing underlying support for the greenback.

Geopolitical risks remain relevant amid tensions involving Iran and the Strait of Hormuz, maintaining a baseline safe-haven bid for the US dollar. Despite these headwinds for gold, the precious metal remains on track to seal its first weekly gain in three weeks, holding above the key $4,000 psychological mark. Across foreign exchange markets, the US dollar recorded its largest gains against the New Zealand dollar.

XAU/USD Technical Outlook

From a technical standpoint, XAU/USD retains a positive short-term bias as long as price action remains above the 20-day Simple Moving Average (SMA). However, momentum oscillators remain in negative territory, suggesting underlying bearish pressure. Immediate resistance is located just above the $4,100 round level, with a confirmed breakout targeting Thursday's peak at $4,155. On the downside, initial support is anchored by the confluence of the 9-day and 14-day Exponential Moving Averages (EMAs), followed by key support at $4,000.

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