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Gold Awaits US Nonfarm Payrolls for Clear Direction
Gold prices rebounded above $5,100 on Friday morning after testing the $5,050 level amid a global sell-off. The US dollar retreated as investors took profits ahead of the crucial US February labor market data. Meanwhile, the 21-day Simple Moving Average (SMA) remains supportive, while a daily close above the 61.8% Fibonacci retracement level is considered critical for gold buyers.
Short-Term Outlook Remains Mildly Bullish
In the short term, the outlook for gold remains slightly bullish as prices continue to hold above the 21-day SMA at $5,087 and well above the 50-, 100-, and 200-day SMAs, all of which are trending upward and reinforcing the broader uptrend.
The Relative Strength Index (RSI) is currently around 54, remaining neutral but still above the midpoint, indicating stable bullish momentum following the recent consolidation from the April peak.
Measured from the $4,402 low to the $5,598 high, gold is currently oscillating near the 61.8% Fibonacci retracement level at $5,141, suggesting buyers are attempting to defend this key pullback zone within the prevailing bullish structure.
Initial support appears at $5,141, the 61.8% retracement level, with the 21-day SMA near $5,087 reinforcing this demand area. A daily close below this zone could expose the 50% retracement level at $5,000, where dip-buying interest is likely to be tested.
Further downside support is seen at the 38.2% retracement near $4,859, followed by the broader trend base around $4,684.
On the upside, immediate resistance is located near $5,235, aligned with last week’s high. The next key barrier lies at the 78.6% Fibonacci retracement around $5,342. A breakout above this level could open the door for a retest of the record high near $5,598, reaffirming the dominant bullish trend.
Weaker US Dollar Supports Gold Recovery
Gold prices regained strength above $5,100, showing signs of renewed momentum as the US dollar weakened due to profit-taking ahead of the highly anticipated US employment report.
A moderate pullback in oil prices also supported gold’s early Friday recovery. The decline followed assurances from the Trump administration that it is considering various measures to address the recent surge in oil and gasoline prices amid the ongoing conflict in Iran.
Oil prices had surged on Thursday, triggering a “sell everything” wave in global markets as investors feared rising inflation and its potential impact on the global economy. The US dollar emerged as the top-performing asset, as investors sought safety in the world’s reserve currency, which temporarily reduced demand for gold as a safe-haven asset.
The greenback was also supported by renewed hawkish expectations regarding the Federal Reserve’s monetary policy outlook, driven by concerns about persistent inflation. Meanwhile, US Treasury yields also climbed, creating additional headwinds for gold, which typically performs better in a low interest rate environment.
Market Focus Shifts to US NFP Data
Looking ahead, gold markets are awaiting the US February employment report, particularly the Nonfarm Payrolls (NFP) figure, for a clearer directional breakout.
Economists expect US NFP to increase by around 60,000 in February, following a 130,000 gain in January. The unemployment rate is forecast to remain steady at 4.3%.
A reading below 50,000 could revive dovish expectations for the Federal Reserve, providing a much-needed boost for non-yielding assets like gold.
Conversely, a stronger-than-expected NFP figure could reinforce the argument for fewer than two Fed rate cuts this year, or even push markets to price out rate cuts altogether—potentially putting significant pressure on gold.
However, market reactions to the NFP release could be quickly overshadowed by new developments in the Middle East conflict, which continues to add uncertainty to global markets.
According to Reuters, US Defense Secretary Pete Hegseth and Admiral Brad Cooper, who leads US forces in the Middle East, stated that the United States has sufficient ammunition to continue bombing operations indefinitely.
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