• Gold extends its decline as stronger-than-expected US jobs data lift the Dollar and Treasury yields.
• Lower Oil prices support Gold's weekly recovery, although hawkish Fed expectations remain a hurdle.
• XAU/USD holds above the 50-period and 100-period SMAs on the 4-hour chart.

Gold (XAU/USD) trades on the back foot on Friday as stronger-than-expected US Nonfarm Payrolls (NFP) data lifts the US Dollar (USD). At the time of writing, XAU/USD trades around $4,050, down 1.20% on the day, after climbing to a two-week high of $4,146 on Thursday.

The US economy added 165K jobs in October, more than double the 65K forecast, while September’s gain was revised higher to 60K from 29K. The Unemployment Rate fell to 4.1% from 4.2%.

The stronger hiring figures point to a resilient labour market, giving the Federal Reserve (Fed) more room to keep fighting inflation and strengthening the case for a December interest rate hike. Higher interest rates increase the appeal of interest-bearing assets, weighing on Gold, which offers no yield.

The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 102.22, up 0.62% on the day. US Treasury yields also rebound, with the benchmark 10-year yield rising 4 basis points (bps) to 4.88%.

Meanwhile, the deepening AI-led sell-off in equities leaves Gold vulnerable to liquidity-driven selling as investors cut positions to raise cash, meet margin calls or cover losses elsewhere.

Still, bullion remains set to break a three-week losing streak, supported by a sharp drop in Oil prices. West Texas Intermediate (WTI) is down around 12% so far this week as the Democratic sweep of Congress in the US midterm elections fuels expectations that lawmakers could curb President Donald Trump’s military campaign against Iran.

However, a negotiated end to the US-Iran war still appears distant despite ongoing diplomatic efforts, while Oil prices have recovered some ground. US President Donald Trump said the US may have to “destroy” the rest of Iran, adding that people will “know soon enough” whether he will act.

Crude and its impact on inflation and interest rates have been key drivers for bullion since the war began in late February. Higher energy costs have added to pressure on central banks to tighten monetary policy.

Technical analysis: bulls struggle to clear 200-period SMA

On the 4-hour chart, XAU/USD holds above both the 50-period and 100-period Simple Moving Averages (SMAs), hinting at a constructive near-term tone even as it remains capped by the 200-period SMA.

The Relative Strength Index (14) has eased from overbought territory to around 55, suggesting bullish momentum has cooled but remains mildly positive. Meanwhile, the Moving Average Convergence Divergence (MACD) hovers near the zero line, indicating limited directional momentum.

On the topside, immediate resistance is seen at the 200-period SMA at $4,114, followed by the horizontal barrier near $4,200, where a sustained break would open the way for a stronger bullish continuation.

On the downside, initial support is located at the 100-period SMA at $4,050, with the 50-period SMA at $4,004 underpinning the broader structure; a deeper pullback could revisit the year-to-date low around $3,870.23, where buyers would be expected to defend the prevailing uptrend.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Gold FAQs

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.