Gold holds above $4,700, close to two-week top as USD bulls seem hesitant ahead of US NFP
- Gold regains positive traction and moves back closer to an over two-week high set on Thursday.
- Hopes for a US-Iran peace deal counter renewed hostilities and undermine the safe-haven USD.
- Diminishing odds for a Fed rate hike also support the bullion as traders await the US NFP report.
Gold (XAU/USD) attracts fresh buyers following the previous day's pullback from over a two-week high and advances to the $4,732-$4,733 area during the Asian session on Friday. Despite renewed hostilities in the Strait of Hormuz, investors seem hopeful over a potential US-Iran peace deal. This triggers a fresh leg down in Crude Oil prices, easing inflationary concerns and tempering bets for a more hawkish US Federal Reserve (Fed). The outlook, in turn, keeps a lid on any further US Dollar (USD) appreciation and turns out to be a key factor acting as a tailwind for the bullion.
The US Central Command said Thursday that US forces targeted Iranian military facilities responsible for launching attacks against warships transiting through the strategic waterway. Earlier, Iran accused the US of violating the ceasefire by striking multiple targets in and around the strait. However, US President Donald Trump stated that a ceasefire with Iran is still in place and added that it would be obvious if the ceasefire was over. Moreover, the US military stated that US forces do not seek escalation, undermining the USD's reserve currency status and supporting the Gold price.
Meanwhile, the latest development fails to assist Crude Oil prices to capitalize on Thursday's goodish intraday move up, though the downside seems cushioned amid geopolitical uncertainties. In fact, Trump warned that US forces will hit a lot harder and more violently if Iran doesn’t sign a deal soon. Moreover, continued economic growth and inflation fears have forced investors to push back their expectations for rate cuts by the US Fed to late 2027 or early 2028. This, in turn, should limit deeper USD losses and cap the upside for the Gold as traders keenly await the US monthly employment details.
The popularly known US Nonfarm Payrolls (NFP) report is due for release later during the early North American session and is expected to show that the economy added 62K new jobs in April. This would mark a significant slowdown from the previous month's reading of 178K. Meanwhile, the Unemployment Rate is forecast to hold steady at 4.3%, while Average Hourly Earnings might have risen by 3.8% YoY in April. Nevertheless, the data will further play a role in influencing expectations about the Fed's policy stance, which, in turn, will drive the USD and provide a fresh impetus to the Gold price.
XAU/USD 4-hour chart
Gold bulls have the upper hand while above 200-SMA on H4
The XAU/USD pair is holding a clear bullish bias as it sits above the 200-period Simple Moving Average (SMA) and above the 61.8% Fibonacci retracement level of the latest upswing. Furthermore, momentum indicators remain constructive. The Relative Strength Index (RSI) at 64.24 stays in positive territory without yet being deeply overbought, while the Moving Average Convergence Divergence (MACD) (12, 26, 9) prints a positive reading near 6.13. This hints that upside momentum is still in play, albeit less aggressive than during the prior leg higher.
On the downside, the 23.6% retracement at $4,703.51 has turned into immediate support, followed by the 200-period SMA at $4,665.16, with deeper retracement cushions emerging at $4,587.31 (38.2%) and $4,493.39 (50.0%) if a broader correction unfolds. On the topside, the next significant resistance appears at the swing-anchor near $4,891.35, and as long as the Gold price holds above the $4,700 area, pullbacks are likely to be viewed as corrective within the prevailing uptrend.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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