Gold Price Forecast: Bear cross on 4H teases XAU/USD sellers ahead of US NFP

• Gold struggles to keep intraday gains around weekly top.
• Market sentiment dwindles as yields weigh on US dollar but gain in stock futures favor cautious optimism.
• US ADP hints at NFP disappointment but a positive surprise will be enough to recall gold sellers.

Gold (XAU/USD) buyers take a breather around weekly high ahead of the key US jobs report as European traders brace for Friday’s bell.

The yellow metal eases from intraday top to $1,806, paring daily gains to 0.06%, by the press time. Even so, the bullion remains firmer on a weekly basis while consolidating the previous week’s losses, the biggest since late November.

While downbeat US dollar and inflation fears could be cited as the key reason behind the XAU/USD’s previous upside, the pre-NFP caution seems to test the gold buyers of late. That said, geopolitical fears emanating from Russia add to the bearish bias over the traditional risk-safety.

European Central Bank (ECB) and the Bank of England (BOE) portrayed a hawkish play the previous day, highlighting inflation as the key challenge.

However, mixed comments from Richmond Fed President Thomas Barkin seem to have stopped the US dollar from cheering the risk-off mood. “The US Federal Reserve needs to begin raising interest rates but it is too soon to say how far or fast that process will need to go to bring inflation under control,” said Fed’s Barkin per Reuters. On the same line were indecisive US economics as the ISM Services PMI for January and Q4 Nonfarm Productivity came in strong but Factory Orders for December and Q4 Unit Labor Costs weakened the previous day.

Elsewhere, Russia warned the West to not escalate tensions and the same seems to have underpinned the upside moves in gold prices.

It should be noted, however, that an impressive performance of stock futures, mainly due to Amazon’s upbeat results, is likely supporting the daily uptick in gold prices.

Amid these plays, the US 10-year Treasury yields rose 1.8 basis points (bps) to 1.845%, bracing for the first weekly gain in three while S&P 500 Futures rise 1.14% around 4,520.

Looking forward, the negative surprise from the US ADP Employment Change for January, to -301K versus +207K forecast, keep gold traders on the edge ahead of the US Nonfarm Payrolls (NFP), expected 150K versus 199K prior. Should the US jobs report portray a positive outcome than widely feared, gold prices may pare the weekly gains.

Read: US January Nonfarm Payrolls Preview: Analyzing gold's reaction to NFP surprises

Technical analysis

Gold retreats towards the weekly support line while extending pullback from the 200-SMA. Also portraying seller’s dominance is the receding bullish bias of MACD and sluggish RSI.

Furthermore, the 50-SMA cuts the 200-SMA for the downside, in what is known as the Bear Cross chart pattern, suggesting additional weakness of the precious metal.

That said, gold sellers may initially aim for the horizontal area comprising January’s low, around $1,783-81.

However, bears will gain extra strength on breaking 78.6% Fibonacci retracement (Fibo.) of December-January upside, near $1,773.

Alternatively, the 50-SMA around $1,808 guards immediate recovery moves of gold ahead of the 200-SMA near $1,812.

Following that, the support-turned-resistance line from December 15, near $1,818, will defend bears. It’s worth noting that the gold buyers will gain a conviction on crossing the 23.6% Fibonacci retracement level of $1,831.

Gold: Four-hour chart

Trend: Further weakness expected