Gold Price Forecast: XAU/USD to edge lower on strong NFP

Gold suffered heavy losses on Thursday and closed below $1,800. On Friday, XAU/USD is seeing a renewed uptick towards $1,800 but downside risks remain intact as investors gear up for the US December jobs report, FXStreet’s Dhwani Mehta reports.

Solid American jobs data to boost Fed’s aggressive tightening bets

“American is seen adding 400K jobs in December vs. 210K created previously, with a potential downtick in the participation rate. Solid jobs numbers are likely to bolster the expectations of aggressive Fed rate hikes, which will pave the way for the balance sheet reduction. Gold will likely succumb to a fresh upswing in the Treasury yields on the US jobs blowout while the greenback will also ride the economic optimism wave. Only a big miss on the labor market report could offer some temporary reprieve to gold bulls, as the Fed’s hawkish narrative will likely remain intact going forward.”

“A four-hourly candlestick closing below the rising trendline support at 1,789 will confirm the bearish continuation formation, calling for a retest of the $1,785 support area. The next significant cushion is seen at the December 16 trough of $1,775. Fresh bearish positions will be created below the latter, as gold sellers will then aim for the $1,750 demand zone.”

“A sustained break above the rising trendline resistance at $1,796 will invalidate the bear flag formation, prompting a meaningful recovery towards the mildly bullish 100-SMA at $1,802. The downward-sloping 21-SMA at 1,806 will then challenge the bullish commitments, as XAU/USD looks to extend the upside towards the 50-SMA at $1,809. The weekly highs near 1,830 will be back on the buyers’ radar if the 50-SMA caves in.”