Gold Price Forecast: XAU/USD consolidates in a range around $1,930-35 area, NFP awaited

• Gold edged lower on Friday and was weighed down by a combination of negative forces.
• Hawkish Fed expectations, rising US bond yields, stronger USD exerted some pressure.
• The uncertainty over Ukraine helped limit the downside ahead of the US jobs data (NFP).

Gold reversed an early European session dip to sub-$1,930 levels, though any meaningful recovery still seems elusive ahead of the US monthly jobs report. The incoming geopolitical headlines, so far, have failed to ease market worries about the possibility of a further escalation in the Russia-Ukraine conflict. In fact, Ukraine's President Volodymyr Zelensky warned that Russia is consolidating and preparing powerful strikes in the country's south, including besieged Mariupol. This, in turn, was seen as a key factor that extended some support to the safe-haven precious metal.

Investors, however, seemed optimistic about the possibility of a diplomatic solution to end the war ahead of the Russia-Ukraine peace talks, which are set to continue on Friday. This was evident from a generally positive tone around the equity markets. The risk-on impulse, along with hawkish Fed expectations, pushed the US Treasury bond yields higher and underpinned the US dollar. This might further cap the upside for the dollar-denominated gold, warranting some caution before positioning for an extension of this week's rebound from sub-$1,900 levels or the two-month low.

The markets seem convinced that the Fed would adopt a more aggressive policy stance and hike interest rates by 50 bps at the next two meetings to combat stubbornly high inflation. The bets were reaffirmed by Thursday's release of the US Core PCE Price Index, which rose to 5.4% YoY in February from the 5.2% previous. Despite the supporting factors, the USD bulls seemed reluctant and preferred to wait for the release of the closely-watched US monthly jobs data. The popularly known NFP report, due later during the early North American session and should provide a fresh impetus to gold prices.

The US economy is expected to have added 490K jobs in March, down from 678K in the previous month. Meanwhile, the unemployment rate is anticipated to edge lower to 3.7% from 3.8% in February. Nevertheless, the data would influence the Fed's policy outlook and drive the USD demand. This, along with fresh developments surrounding the Russia-Ukraine saga, will assist investors to determine the next leg of a directional move for gold.

Technical outlook

From a technical perspective, the commodity's inability to gain any meaningful traction and find acceptance above the 100-period SMA on the 4-hour chart favour bearish traders. That said, repeated failures to find acceptance below the $1,900 mark make it prudent to wait for some follow-through selling before confirming the negative outlook. In the meantime, the $1,914 area could act as immediate support ahead of the $1,895-$1,890 region. A convincing break through the latter would set the stage for a slide towards the next relevant support near the $1,872-$1.870 region.

On the flip side, the overnight high, around the $1.950 area should cap the immediate upside. Sustained strength beyond might trigger a short-covering move and push gold prices to an intermediate hurdle near the $1,964-$1.966 zone. The momentum could further get extended towards the next relevant barrier, around the $1,985-$1,988 region, above which bulls might aim to reclaim the key $2,000 psychological mark.

Gold 4-hour chart

Key levels to watch