Gold Price Forecast: XAU/USD sees a downside to near $1,860 ahead of US Employment data

• Gold price is declining lower to near $1,860.00 as uncertainty over the US NFP release looms.
• An extremely tight labor market could add inflationary pressures.
• The formation of an Inverted Flag chart pattern could weigh pressure on gold prices.

Gold Price (XAU/USD) is oscillating in a narrow range of $1,872.95-1,881.46 as investors are awaiting the release of the US Nonfarm Payrolls (NFP), which are due on Friday. The asset witnessed a steep fall after testing the barricade of $1,910.00 and is aiming to slip further to near $1,860.00 amid uncertainty over the US employment data.

The announcement of the monetary policy by the Federal Reserve (Fed) resulted in a firmer rebound in the gold prices but most of them have been surrendered as the uncertainty of the interest rate decision has been carry-forwarded by the US NFP. The additions in the US labor market are expected t land at 391k against the prior print of 431k.

Despite the solid hangover of multi-decade inflation, the US economy is experiencing a tight labor market, which clears that the growth has not vanished and the economy is far from recession fears. However, a tight labor market could also fuel inflationary pressures as more job openings will result in higher wages, which eventually will add up price pressures and an extremely tight labor market would raise the odds of a 75 basis point (bps) by the Fed.

Gold technical analysis

The precious metal is forming an Inverted Flag chart pattern on a smaller timeframe. The formation of the above-mentioned chart pattern indicates a consolidation after a sheer downside, which will be followed by a further downside move. The 50-period Exponential Moving Average (EMA) at $1,883.86 is declining, which adds to the downside filters while the 20-EMA at $1,879.15 is acting as a major resistance for the gold prices. Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range but is likely to attract volatility after slipping below 40.00 decisively.

Gold 15-minute chart