Gold Price Forecast: XAU/USD oversteps three-week high at $1,870 on US NFP’s downbeat forecasts

• Gold price has surpassed $1,870.00 on lower consensus for the US NFP.
• The US NFP is seen lower at 325k against the former print of 428k.
• The downbeat US ADP Employment Change has diminished the DXY’s appeal.

Gold price (XAU/USD) is balancing around $1,870.00 after a juggernaut rally on Thursday. Wednesday’s rebound from the low of $1,828.57 turned into a power-pack rally, which drove the gold prices firmly and refreshes three-week's high at $1,870.45. The precious metal is bided by the market participants on lower employment generation by the US economy in May.

The US Automatic Data Processing (ADP) Employment Change reported an addition of 128k jobs in May, less than half the expectations of 300k and lower than the prior print of 202k. Considering the downbeat ADP numbers, a downward shift in the US Nonfarm Payrolls (NFP) cannot be ruled out. As per the market consensus, the US NFP is seen at 325k, lower than the prior print of 428k. After the release of the downbeat ADP numbers, investors should brace for extreme volatility in the US dollar index (DXY), which will underpin the gold prices.

The US dollar index (DXY) has witnessed a steep fall after failing to sustain above the crucial resistance of 102.50. A sheer downside move has dragged the asset to near 101.70. Investors should be aware of the fact that and meaningful plunge in the US NFP will result in fresh monthly lows in the asset.

Gold technical analysis

An upside break of the 38.2% Fibonacci retracement at $1,867.65, which is placed from April 18 high at $1,998.43 to May 16 low at $1,786.94. The formation of the golden cross represented by the bullish crossover of the 50- and 200-period Exponential Moving Averages (EMAs) at $1,847.90, adds to the upside filters. The Relative Strength Index (RSI) (14) has shifted into a bullish range of 60.00-80.00, which signals more gains ahead.

Gold hourly chart