Gold Price Rebounds Toward $4,100 Ahead of Key US Jobs Report
Gold prices (XAU/USD) extended their recovery toward the $4,100 level during Thursday's European session as the US Dollar remained under selling pressure ahead of the release of the closely watched US June employment report.
The weaker greenback provided additional support for bullion, while investors turned their attention to the upcoming US Nonfarm Payrolls (NFP) data, a key indicator that could influence the Federal Reserve's next interest rate decision.
Gold Technical Outlook Remains Cautiously Bullish
From a technical perspective, gold's overnight short-covering rally stalled near the 38.2% Fibonacci retracement of the recent two-week decline. Moreover, XAU/USD continues to trade below its 100-period Simple Moving Average (SMA), suggesting that the broader short-term trend remains slightly bearish.
However, momentum indicators are showing signs of improvement. The Moving Average Convergence Divergence (MACD) has turned positive above the zero line, while the Relative Strength Index (RSI) is holding near 54, indicating strengthening buying momentum.
As long as gold remains above the 23.6% Fibonacci retracement, the recovery could continue, although upside potential may remain limited within the prevailing market structure.
Key Gold Price Levels to Watch
Immediate resistance is located at the 38.2% Fibonacci retracement near $4,112.32, followed by the 100-period SMA at $4,145.47 and the 50% Fibonacci retracement at $4,164.62.
Additional upside targets include:
61.8% Fibonacci retracement: $4,216.91
78.6% Fibonacci retracement: $4,291.37
Recent cycle high: $4,386.20
On the downside, initial support stands at the reclaimed 23.6% Fibonacci retracement near $4,047.62. A decisive break below this level could expose the recent swing low around $3,943.03.
Weak US Economic Data Weighs on the Dollar
On Wednesday, Automatic Data Processing (ADP) reported that US private-sector employment increased by 98,000 jobs in June, falling short of both the previous reading of 122,000 and economists' expectations of 113,000.
Meanwhile, the Institute for Supply Management (ISM) Manufacturing PMI eased to 53.3 in June from 54.0 previously. The Prices Paid Index dropped sharply to 73.0 from 82.1, while the Employment Index improved slightly to 49.7 from 48.6 in May.
In addition, declining crude oil prices have significantly eased near-term inflation concerns, reducing demand for the US Dollar and providing further support for gold prices.
Fed Rate Expectations Continue to Support the US Dollar
Despite weaker economic indicators, markets continue to expect the Federal Reserve to maintain a relatively hawkish stance.
According to the CME FedWatch Tool, traders currently assign roughly a 64% probability of a Federal Reserve interest rate hike in September and nearly an 85% chance of higher borrowing costs by year-end.
Those expectations were reinforced by Federal Reserve Chair Kevin Warsh, who reiterated on Wednesday that the central bank remains committed to its 2% inflation target and signaled that monetary policy would not be eased prematurely despite political calls for lower interest rates.
Several Fed officials have also indicated that additional policy tightening may still be necessary to bring inflation back under control. This outlook could limit further downside in the US Dollar while capping gains in non-yielding assets such as gold.
Geopolitical Risks Keep Gold in Focus
Geopolitical uncertainty also remains a key market driver.
Indirect negotiations between the United States and Iran concluded in Qatar without any significant progress toward a lasting peace agreement, leaving tensions surrounding the strategically important Strait of Hormuz unresolved.
Meanwhile, Russia launched another missile and drone attack on Ukraine's capital, Kyiv, early Thursday, maintaining demand for safe-haven assets.
Investors now await the release of the US Nonfarm Payrolls report later in the North American session. The employment data is expected to play a crucial role in shaping Federal Reserve policy expectations, influencing the US Dollar, and determining the near-term direction of gold prices.