Gold Price Forecast: XAU/USD moves away from multi-week low, retakes $1,700 ahead of NFP

• Gold edges higher on Friday and moves away from a multi-week low touched the previous day.
• A modest USD pullback from a two-decade high, retreating US bond yields offer some support.
• Hawkish Fed expectations should cap any meaningful upside ahead of the US jobs data (NFP).

Gold gains some positive traction on Friday and recovers a major part of the previous day's losses to the sub-$1,690 levels - the lowest since July 21. The steady intraday ascent lifts spot prices to a fresh daily high, further beyond the $1,700 mark during the first half of the European session.

The US dollar edges lower and moves away from a two-decade high touched the previous day amid some repositioning trade ahead of the closely-watched US monthly jobs report. Apart from this, a softer tone surrounding the US Treasury bond yields further contributes to the modest USD downtick, which, in turn, is seen as lending support to the dollar-denominated commodity. That said, any meaningful positive move still seems elusive amid hawkish Fed expectations.

In fact, the markets seem convinced that the US central bank will continue to tighten its policy to tame inflation and have been pricing in a supersized 75 bps rate hike at the September meeting. The bets were reaffirmed by the recent hawkish remarks by several Fed officials. This should act as a tailwind for elevated US bond yields and limit any meaningful USD corrective slide, capping gains for the non-yielding yellow metal, at least for time being.

Investors might also prefer to move to the sidelines and wait for a fresh catalyst. Hence, the focus will remain glued to the US NFP report, due for release later during the early North American session. The data might influence Fed rate hike expectations and will play a key role in influencing the USD price dynamics. This, in turn, should assist investors to determine the near-term trajectory for gold ahead of the crucial FOMC meeting on September 20-21.

Technical levels to watch