Gold Price Forecast: XAU/USD extends pullback from the key EMAs toward $1,850, US NFP eyed

• Gold prices remain pressured while extending latest pullback from 21-day, 50-day EMA.
• Firmer USD, risk-off mood weigh on precious metal prices amid fresh fears of inflation, growth.
• US NFP will be watched closely as the Fed’s latest Fed rejection of 75 bps assumes easing in employment conditions.

Gold (XAU/USD) remains on the back foot at around $1,873, down 0.20% intraday as traders react to the latest bout risk-off mood during full markets on Friday. The metal’s declines could also be linked to the anxiety ahead of the crucial US employment report for April, considering the latest Fed guidance and the market’s U-turn on Thursday.

Risk appetite worsened the previous day after the Bank of England (BOE) forecasted doubt-digit inflation and economic recession. The same rocked the US boat due to the rising inflation fears and firmer jobs market, which the Fed seemed to have taken lightly by rejecting 75 basis points (bps) of a rate hike.

Also challenging the sentiment is the worsening covid conditions in China and the European Union’s (EU) readiness for more sanctions on Russia. Further, the US Securities and Exchange Commission (SEC) added over 80 Chinese firms to the list of companies facing probable delisting from the US exchanges, which portrayed fresh Sino-American tussles and weighed on the risk appetite as well.

Amid these plays, Wall Street indices slumped more than 3.0% each while the US 10-year Treasury yields rallied 3.40% on a daily closing while rising to the fresh high in late 2018 beyond 3.00%. As a result, the US Dollar Index (DXY) also regained its strength and poked April’s multi-month high around 104.00. It’s worth noting that the S&P 500 Futures print mild gains and the DXY remains firmer around 103.60 by the press time.

Looking forward, the US NFP will be crucial for the gold report considering the Fed’s sustained rejection of a larger rate lift cycle, as well as the recent increase in the inflation expectations portrayed by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data.

Forecasts suggest the headline US Nonfarm Payrolls (NFP) to ease to 391K from 431K whereas the Unemployment Rate may also decline to 3.5% from 3.6%.

Also read: Gold Price Forecast: The dollar steals the show as fears rule financial markets

Technical analysis

Gold prices reverse the early week’s rebound from a 200-day EMA, as well as four-month-old horizontal support, as traders brace for the US NFP.

The latest pullback highlights the 21-day and the 50-day EMA, around $1,908 and $1,912 in that order, as the short-term key hurdles around bearish MACD signals and weak RSI (14).

Hence, the metal’s further declines appear more likely, which in turn focuses on the 200-day EMA level of $1,858 as the nearby key support before an area ranging from January, surrounding $1,850-53.

Should the gold prices drop below $1,850, bears can aim for $1,810 and the $1,800 threshold before watching over the yearly bottom surrounding $1,780.

Alternatively, a clear upside break of the $1,912 needs validation from 50.0% Fibonacci retracement (Fibo.) of January-March upside, around $1,927, to challenge the $1,960 resistance confluence, including a convergence of the downward sloping trend line from March and 50% Fibo.

Gold: Daily chart

Trend: Pullback expected