Gold Prices Forecast: XAU/USD Traders Await Impact from Upcoming NFP Data

Gold Market Analysis and Forecast

The recent series of gains in gold prices, marking its third weekly rise in a row, experienced a slight interruption on Friday. This pause was primarily due to market anticipation of the U.S. non-farm payrolls data, which is crucial for predicting future Federal Reserve monetary policy decisions.

At 10:28 GMT, XAU/USD is trading $2293.185, up $1.975 or +0.09%.

Recent Performance and Outlook

Gold’s recent uptrend, driven by significant central bank purchases and strong demand from investment funds, culminated in a 2.3% increase this week. Although the market suggests a possible correction due to its current high value, the general perspective for gold remains robust.

Influencing Factors

Gold’s value has been influenced by a variety of factors. The decline in the U.S. dollar, expectations of Federal Reserve rate reductions, mounting tensions in the Middle East, and global economic uncertainties all contribute to its current appeal. The upcoming U.S. March non-farm payrolls report is expected to provide further insight into potential Federal Reserve actions.

Federal Reserve Policy and Treasury Yields

The Federal Reserve, led by Jerome Powell, has shown a careful approach to adjusting rates, acknowledging the current economic strength. Markets predict a 60% chance of a Fed rate cut by June. Meanwhile, U.S. Treasury yields have seen minor changes, with both the 10-year and 2-year yields showing small increases.

Dollar and Market Outlook

After varying considerably, the U.S. dollar is now stable as investors await the jobs report. This report, along with forthcoming inflation data, will play a significant role in shaping the Federal Reserve’s upcoming policy decisions. Gold continues to be an attractive option for risk-averse investors amidst these economic variables.

Geopolitical Factors

Persistent geopolitical tensions, especially concerning Israel and Iran, are influencing global market sentiments. These developments, along with recent statements by U.S. President Joe Biden, highlight the complex international environment, enhancing the appeal of gold as a safe investment.

Short-Term Forecast

Given these considerations, gold’s short-term outlook is bullish. While the upcoming non-farm payrolls data may cause some temporary fluctuations, the combination of global tensions, economic uncertainties, and expectations surrounding Federal Reserve policies are likely to support gold’s continued price increase. Investors should stay alert to the immediate effects of economic data but also focus on the more persistent factors that favor a rise in gold prices.

Technical Analysis

Despite the one day setback, XAU/USD remains in an uptrend, just a little weaker than the previous session with the formation of a minor top at $2305.65. A trade through this level will signal a resumption of the uptrend.

The main trend is not being threatened at this time, however, gold remains vulnerable to a near-term pullback into $2225.90. Should the selling pressure continue beyond that point, $2146.155 will become the key focal point.