Gold Price Struggles to Build Momentum Ahead of US NFP Report

Gold price (XAU/USD) has rebounded modestly from a 1.5-week low reached during the Asian session on Friday, trading near the top of its daily range around $2,640. Expectations of a Federal Reserve (Fed) rate cut at the December policy meeting keep the US Dollar (USD) near a multi-week low, lending some support to the safe-haven metal. Additionally, persistent geopolitical tensions from the Russia-Ukraine conflict, unrest in the Middle East, concerns about President-elect Donald Trump’s tariff policies, and a softer risk appetite provide further tailwinds for gold.

However, the recovery in gold lacks follow-through, as traders remain cautious ahead of the US Nonfarm Payrolls (NFP) report, which could significantly influence Fed policy expectations and USD dynamics. At current levels, gold is on track to log its second consecutive weekly decline.

Key Factors Supporting Gold

Geopolitical Risks: Ongoing conflicts, particularly in Ukraine and the Middle East, continue to bolster demand for safe-haven assets like gold.
Fed Rate Cut Bets: According to the CME Group’s FedWatch Tool, markets are pricing in a 70% chance of a 25-basis-point rate cut at the Fed’s December meeting, with the remaining 30% anticipating a pause.
US Treasury Yields: The benchmark 10-year US Treasury yield hovers near its lowest level since October 22, keeping the USD subdued and indirectly supporting gold.
US Labor Market Data: Rising Initial Jobless Claims (224K) and weak Challenger Job Cuts data reinforce concerns about a slowing labor market, further supporting gold ahead of the critical NFP release.

Technical Analysis

Immediate Resistance:

The $2,649 level poses the first hurdle, followed by the $2,655 supply zone.
A decisive break above the $2,666 swing high could shift momentum in favor of bulls, opening the door for a move toward the $2,700 mark.

Immediate Support:

The session low near $2,614-2,613 acts as strong immediate support, with further downside guarded by the $2,605-2,600 zone.
Below that, the 100-day SMA at $2,583 could come into play, followed by November’s swing low near $2,537-2,536.

Broader Downside Risk:
A sustained break below the $2,537-2,536 area could deepen losses, exposing the critical $2,500 psychological mark.

Indicators:

The 4-hour 100-period SMA suggests bearish momentum, but the swift intraday recovery warrants caution before assuming further downside.
A bullish breakout requires a daily close above $2,655 to confirm sustained buying interest.

Outlook Ahead of NFP

Investors are keenly awaiting Friday’s US NFP report for clarity on the Fed’s monetary policy path. A weaker-than-expected jobs number could reinforce expectations of further rate cuts, pressuring the USD and driving gold higher. Conversely, a strong NFP print could renew selling pressure on gold, as the Fed may adopt a less dovish stance.

Traders should watch for the $2,655 level on the upside and the $2,600 support zone on the downside for cues on the next directional move. The broader outlook for gold remains tied to geopolitical developments and the evolving Fed rate trajectory.