Gold remains supported by ongoing geopolitical tensions and weak US economic data, maintaining its bullish momentum for now. However, forex traders should be cautious ahead of the US Non-Farm Payroll (NFP) report due on Friday, which could significantly impact gold’s direction.
The upcoming NFP report is expected to provide a clearer economic picture compared to previous data that was distorted by government shutdown effects. Stronger-than-expected employment numbers could trigger a pullback in gold prices as markets may reduce expectations for an imminent Federal Reserve rate cut. Conversely, softer data would likely continue to support gold’s upward trend.
Adding to the market’s focus, the US Supreme Court has scheduled an opinion day for Friday, potentially ruling on former President Trump’s tariffs. A decision to strike down the tariffs could lead to a drop in gold prices as concerns over stagflation ease. If the tariffs are upheld, gold’s upside should remain intact but without significant additional gains.
Looking at the bigger picture, gold is expected to continue its uptrend. Real yields are anticipated to stay low due to the Federal Reserve’s dovish stance, which generally supports higher gold prices. That said, short-term fluctuations may occur if interest rate expectations shift towards a more hawkish outlook.
Technical analysis supports this view. On the daily chart, gold has nearly recovered from last week’s sell-off. Buyers may find a better risk-to-reward opportunity near the trendline as they position for a rally toward new all-time highs. Sellers will likely wait for a clear break below current levels before targeting declines toward the 3887 support area.
On the four-hour chart, there is a minor support zone around the 4400 level. A pullback to this area could attract buyers who would set stops just below the minor trendline, aiming for a push to fresh highs. Sellers would need to see a break below this zone to consider short positions toward the major trendline.
The one-hour chart shows that the lower bound of today’s average daily range aligns closely with the support level, potentially increasing buyer confidence if prices pull back here. Sellers will require a trendline break to open the door for a deeper correction toward the major trendline.
Forex traders should also monitor several key upcoming economic releases that could influence gold and broader markets: US ADP employment figures, ISM Services PMI, and Job Openings data today; US Jobless Claims tomorrow; and finally, the US NFP report along with the Supreme Court tariff decision on Friday.
Original Source: Giuseppe Dellamotta of investinglive.com
