Struggling Gold Price Looks to US NFP Report for Direction

• Gold price continues its upward trend for the third consecutive day but faces some resistance.
• The anticipation of a potential change in the Fed’s policy is still boosting the market.
• An increase in US bond yields is supporting the US Dollar and capping the gains for Gold.
• Traders are waiting for the release of the US NFP report before making any significant moves.

During the Asian session on Friday, the struggle for Gold price (XAU/USD) to gain momentum continues as it remains within a multi-day range. Despite this, the precious metal is holding onto its positive position for the third day in a row, fueled by expectations that interest rates in the US may have reached their peak. Investors are patiently waiting for the release of the highly anticipated US Nonfarm Payrolls (NFP) report, which could potentially impact the market and lead to a shift in the Federal Reserve’s (Fed) policy towards a rate cut as early as March 2024, ultimately boosting Gold.

Prior to the release of the NFP report, an increase in US Treasury bond yields is strengthening the US Dollar’s demand. This, in turn, is causing traders to hesitate when it comes to bullish bets on the USD-denominated Gold price. Furthermore, the recent strong rally in the US equity markets is adding to the headwinds faced by the safe-haven XAU/USD. However, despite these challenges, a significant downward correction is still unlikely due to expectations of a dovish Fed, a gloomy global economic outlook (especially in China), and ongoing geopolitical tensions.

• The growing belief that the Federal Reserve has finished tightening its policy and may start cutting rates in 2024 remains a positive factor for the Gold price.
• This week’s US JOLTS Job Openings data and ADP report indicate a cooling US labor market, reinforcing dovish Fed expectations.
• Traders are currently pricing in a likelihood of over 60% for a 25 bps Fed rate cut as early as the March 2024 policy meeting, according to the CME group’s FedWatch Tool.
• The yield on the 10-year US government bond is moving away from a three-month low, giving some support to the US Dollar and hindering gains for the non-yielding metal.
• The absence of further escalation in Middle East tensions and the recent risk-on rally in US equity markets are also contributing to keeping a lid on the safe-haven XAU/USD.
• Traders are now eagerly awaiting the US monthly employment details to gain more insight into labor market conditions and the possible timelines for Fed policy adjustments.
• The headline NFP print is expected to show that the US economy added 180K jobs in November.

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