Gold Holds Firm Ahead of NFP as Dollar and Treasury Yields Drive Direction

Gold prices remained firm in Friday’s trading session (September 4), extending a strong rebound seen over the past two sessions. XAU/USD traded around $4,477 per troy ounce during the Asian session after previously moving back toward the $4,500 area. Gold’s recovery has been supported by a weaker U.S. dollar and lower Treasury yields as markets scaled back expectations for a Federal Reserve rate hike in September.

From a fundamental perspective, sentiment toward gold improved after Federal Reserve Governor Christopher Waller indicated that he was leaning toward keeping interest rates unchanged at the September meeting if inflation continued to show signs of easing. His remarks reduced market expectations for a 25-basis-point rate hike and eased some of the pressure on gold. Since gold does not offer interest income, lower rate expectations and declining bond yields generally make the metal more attractive to investors.

Falling U.S. Treasury yields have provided additional support. The 10-year Treasury yield moved lower, while the two-year yield also eased. At the same time, the U.S. Dollar Index slipped below the 99.00 level and traded near its lowest point in more than a week. The combination of a softer dollar and lower yields remains a positive factor for gold in the short term.

However, the main focus for markets today is the release of the U.S. Non-Farm Payrolls report for August. Consensus expectations point to employment growth of around 56,000 jobs, while the unemployment rate is expected to remain at 4.1%. A weaker-than-expected NFP report could further reduce expectations for additional Fed tightening, weigh on the dollar and support another leg higher in gold. On the other hand, a much stronger jobs report could revive expectations for higher interest rates and put renewed pressure on XAU/USD.

From a technical perspective, gold’s short-term structure has turned more bullish after rebounding from a recent low near $4,282 earlier in the week. Prices have moved back above the middle Bollinger Band and the 100-day Simple Moving Average, while the Relative Strength Index is around 55, indicating that bullish momentum has improved without yet reaching overbought territory.

The $4,460 area is the nearest support level to watch. As long as gold remains above this zone, the possibility of another test of the psychological $4,500 level remains open. If buying momentum strengthens following the NFP release, the next upside move could target higher resistance levels, with the upper Bollinger Band located near the $4,675 area.

On the downside, a failure to hold above $4,460 could trigger a correction toward the $4,360 area, which is close to the 100-day SMA. Stronger selling pressure could then expose the $4,245 region, particularly if U.S. employment data significantly beats expectations and pushes the dollar and Treasury yields higher.

Overall, gold maintains a moderately bullish bias, although today’s direction will depend heavily on the U.S. NFP report. A weaker dollar, lower Treasury yields and reduced expectations for a Fed rate hike continue to provide a supportive backdrop. As long as XAU/USD holds above $4,460, buyers retain the advantage and could attempt another break above $4,500, while a move below that support would increase the risk of a deeper correction.(mrv)

Source : Newsmaker.id