Gold Price Forecast: XAU/USD recovery stalls below $4.500 awaiting US Nonfarm Payrolls
- XAU/USD rebound from lows near $4,280 has stalled below $4,500.
- Lower US yields support Gold's rally, but investors are wary of selling USD ahead of the release of NFP data.
- The precious metal faces key resistance at the 200-day SMA, at $4,534.
Gold (XAU/USD) trades flat at the $4,470 area on Friday, as the previous two days’ rebound from $4,280 failed to find acceptance above the $4,500 psychological area. US Treasury yields have pulled back from highs as markets reassess the odds for an interest rate in September, but investors remain wary of selling the US Dollar ahead of the release of US Nonfarm Payrolls (NFP) data, due later on the day.
Analysts at OCBC note that gold “rose more than 2% towards $4,510 intra-session high as Waller’s comments prompted markets to pare September Federal Reserve (Fed) hike expectations, pulling UST yields and the USD lower.”
The bank remains constructive on the pair, although they warn that "near-term direction is likely to stay highly sensitive to Fed repricing,” with NFP data seen as a potential driver of yields and the USD, while “next week’s CPI and PPI should be more decisive in determining whether the recent disinflation trend is sufficient to keep the Fed on hold.”
Technical Analysis: Gold nears key resistance at the 200-day SMA
XAU/USD trades at $4,464, still to confirm above a previous support area around $4.470 (August 20 low). Momentum indicators in the daily chart fail to provide a clear view, as the Relative Strength Index (RSI) struggles to take off from the key 50 line, while the Moving Average Convergence Divergence (MACD), still in negative territory, suggests that downside pressure is moderating, rather than fully reversing.
Gold bulls face a string of resistances at the mentioned $4,470 area, the psychological $4,500 level, and especially the 200-day Simple Moving Average (SMA), now at $4,534. This is a very popular indicator for FX traders, and a confirmation above that line would suggest that the correction from $4,690 highs in late August has completed
Bearish attempts, on the other hand, are likely to find support between the August 14 low, at $4,311, and the intra-week low of $4,282. A potential reversal from the 200-day SMA below these levels would confirm a "Head and Shoulders" pattern and add pressure towards the August 6 low of $4,220 and the late July lows near $4,000.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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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