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Gold Awaits US Nonfarm Payrolls for Sustained Upside Momentum
Gold prices remain capped below the $5,100 level on Wednesday morning, building momentum ahead of the highly anticipated US Nonfarm Payrolls (NFP) report. The US Dollar (USD) is attempting a recovery amid continued strength in the Japanese Yen and growing downside risks surrounding the US jobs data.
Despite near-term consolidation, Gold (XAU/USD) continues to hold firmly above the key $5,000 psychological level. The daily Relative Strength Index (RSI) remains bullish, while traders closely monitor the 61.8% Fibonacci retracement resistance at $5,141.
Technical Outlook: Bullish Bias Intact Above Key Moving Averages
The 21-day Simple Moving Average (SMA) has crossed above the 50-, 100-, and 200-day SMAs, reinforcing a strong bullish alignment as long as prices remain above these key indicators. All major SMAs are sloping higher, signaling sustained upward momentum.
The 21-day SMA at $4,918.36 now acts as dynamic support. Meanwhile, the RSI (14) prints at 57.73, reflecting neutral-to-bullish conditions and supporting further upside without signaling overbought territory.
Measured from the high of $5,597.89 to the low of $4,401.99, the 50% Fibonacci retracement stands at $4,999.94, while the 61.8% retracement at $5,141.05 represents the next major resistance barrier. A sustained break above this level could open the door for further gains.
However, if bullish momentum fades before clearing $5,141, initial support is seen at the rising 21-day SMA near $4,918. As long as prices remain above this base, the broader uptrend remains intact.
Gold Price Forecast: How Will XAU/USD React to US NFP Data?
Gold appears to be gathering strength for a potential sustained rally as traders eagerly await the delayed January US employment report. The release was postponed due to the recent four-day government shutdown.
The final annual revision to the NFP figures will also be published at 13:30 GMT on Wednesday, adding another layer of market sensitivity. Attention then shifts to the US Consumer Price Index (CPI) report scheduled for Friday, intensifying the employment-versus-inflation debate.
Economists expect January headline NFP to show an increase of 70,000 jobs, following December’s 50,000 gain. Meanwhile, preliminary benchmark revisions released last September indicated a downward adjustment of -911,000 jobs for the twelve months ending March 2025.
The Unemployment Rate is forecast to remain steady at 4.4%, though its market impact may be limited unless a significant surprise emerges.
Scenarios: Strong vs Weak NFP Impact on Gold
📉 Weak NFP Scenario
If the NFP print comes in weaker than expected — especially alongside a substantial downward benchmark revision — concerns over US labor market weakness could intensify.
Such a development would likely increase expectations for a Federal Reserve rate cut in June. Dovish Fed expectations typically support Gold prices while weighing on the US Dollar, potentially triggering a fresh bullish move in XAU/USD.
📈 Strong NFP Scenario
Conversely, a stronger-than-expected jobs report with no major downward revisions could revive corrective pressure on Gold.
Reduced expectations of a June Fed rate cut would likely boost the US Dollar and pressure non-yielding assets such as Gold, potentially leading to short-term downside movement.
Short-Term Volatility Expected
Regardless of whether the NFP report surprises to the upside or downside, Gold is expected to experience heightened volatility. However, any initial reaction may prove temporary, as traders quickly shift focus to Friday’s US inflation data for clearer guidance on the Federal Reserve’s monetary policy trajectory.
For now, Gold remains technically supported above $5,000, with the next decisive move hinging on the US labor market data and broader interest rate expectations.