Gold Defies Stronger-Than-Expected Nonfarm Payrolls to Reclaim $4,100, Poised to Reach $4,300

TradingKey - As of the Asian session on Monday (Nov. 9), gold prices (XAUUSD) rose again after a modest pullback last Friday, climbing more than 1% intraday to touch a high of $4,134.27 and reclaim the $4,100 level. Last Friday, U.S. October nonfarm payrolls significantly beat market expectations, boosting the U.S. dollar and Treasury yields and sending gold briefly down to near $4,033. However, gold gained 5% over the week, posting its largest weekly advance since late August and indicating that the recent rebound is not yet entirely over.

US Nonfarm Payrolls Far Exceed Expectations, Reigniting Fed December Rate-Hike Pressure

Data released last Friday by the U.S. Bureau of Labor Statistics showed that U.S. nonfarm payrolls increased by 165,000 in October, significantly higher than market expectations of 65,000, while the unemployment rate declined from 4.2% in September to 4.1%. Meanwhile, average hourly earnings rose 0.4% month-over-month and 3.1% year-over-year, indicating that wage growth remained resilient alongside an improving labor market.

Notably, the employment report also revised up figures for the prior two months. Specifically, nonfarm payroll gains for August were revised up from 133,000 to 186,000, and for September from 29,000 to 60,000, representing a combined upward revision of 84,000 jobs across the two months. This further alleviated earlier market concerns over a sustained slowdown in U.S. employment growth.

The strong nonfarm payroll figures suggest that the U.S. labor market remains resilient, reigniting expectations for another Federal Reserve interest rate hike in December. According to the CME FedWatch Tool, following the data release, the probability of a rate hike at the Fed's December meeting rose from 70.7% a week earlier to 78.5%. Meanwhile, the U.S. Dollar Index climbed by as much as 0.7%, and the 10-year U.S. Treasury yield moved higher in tandem. A stronger dollar raises the cost of buying gold for holders of other currencies, while higher Treasury yields increase the opportunity cost of holding non-yielding bullion, sending gold prices lower in the short term.

However, gold did not extend its decline, ultimately settling near $4,065 last Friday and rebounding above $4,100 in early Asian trading on Monday. Previously, the U.S. dollar and Treasury yields retreated noticeably following the U.S. midterm elections, while falling international crude oil prices also alleviated some inflation concerns, continuing to provide gold with a degree of support.

In addition, medium- to long-term demand for gold remains resilient. According to data from the World Gold Council, global central banks posted net gold purchases of approximately 321 metric tons in the third quarter, while gold ETFs also maintained capital inflows. Although these demand factors help support gold prices, they are currently insufficient in the short term to fully offset the impact of shifting U.S. interest rate expectations.

Gold Price Technical Analysis

Gold price daily chart, Source: TradingView

From the daily chart, gold prices previously staged a rapid rebound from $3,870.1 on October 30 and climbed as high as $4,147.06 last Thursday, successfully breaking above the rebound high of $4,082.89 on October 28, indicating that gold's bullish structure has improved. Meanwhile, although last Friday's non-farm payrolls exceeded expectations, gold prices dipped before rebounding, showing that market selling pressure has been absorbed, which in turn supported further gains in gold today.

Currently, gold prices climbed back above $4,100 today while fully recouping Friday's losses, demonstrating strong short-term bullish momentum. In the near term, gold may extend its gains, with the primary upside target testing the recent high of $4,147.06. A breakout above this level would lead gold to further test resistance in the $4,200–$4,230 range. If gold can break through and hold above $4,230, it will open up upside room toward the $4,300 mark.

On the downside, the primary support level to watch is the $4,100 mark. If this level is lost, gold could test downward toward the $4,050–$4,027 range. If declines continue, gold may retest support at the $4,000 mark.