Gold Price Forecast: XAUUSD floats above $1,620 key support ahead of US NFP

• Gold price holds lower ground after refreshing monthly low, sidelined of late.
• Pre-NFP consolidation triggers a corrective bounce from five-week-old ascending support line.
• Sour sentiment, firmer yields and hawkish Fed keep XAUUSD buyers hopeful ahead of US jobs report.

Gold price (XAUUSD) remains sluggish around $1,630, snapping a two-day downtrend, during early Friday. In doing so, the previous metal traders lick their wounds at the lowest levels in five weeks as traders await the key US jobs report.

In addition to the pre-data caution, a lack of major updates and the traders’ reassessments of the previous moves ahead of the weekend also seemed to have probed the XAUUSD bears of late.

The US dollar cheered the fears emanating from China, North Korea and Russia, as well as the strong yields, to regain the bull’s confidence after witnessing the heavy blow on the previous week, which in turn weighed on the gold prices of late.

That said, the US Dollar Index (DXY) rose the most in nearly a week despite mixed US data and downbeat inflation expectations. Talking about the data, US ISM Services PMI for October dropped to 54.4 from 56.7 prior and 55.5 market consensus. However, the Factory Orders matched 0.3% forecast versus 0.2% upwardly revised previous readings. It should be noted that the US S&P Global Composite PMI and Services PMI got an upward revision from their preliminary readings for the stated month whereas the Initial Jobless Claims eased to 217K for the week ended on October 28 versus 220K expected and 218K prior. On the other hand, US inflation expectations, as per the 10-year and 5-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, dropped to the lowest levels since October 19 and 13 in that order.

Amid these plays, the Wall Street benchmarks closed in the red while the US 10-year Treasury yields refreshed a one-week high to 4.22% before retreating to 4.15%. Notably, the US 2-year bond coupons rose to the highest levels since 2007. It should be noted that the S&P 500 Futures print mild losses while the yields are sidelined at the latest, which in turn portrays the market’s indecision.

To sum up, the US employment report for October could help XAUUSD traders to overcome the lack of momentum. Forecasts suggest that the headline US NFP could ease to 200K in October from 263K prior while the US Unemployment Rate may increase to 3.6% from 3.5% prior. That said, the downbeat forecasts for the scheduled statistics signal a corrective move from the key support line in case of a surprise.

Also read: US October Nonfarm Payrolls Preview: Analyzing gold's reaction to NFP surprises

Technical analysis

Gold price struggles to extend the bounce from an upward-sloping support line from September 28 as a one-week-old previous support line challenges the recovery moves near $1,632.

The metal’s inability to cross the nearby hurdle could also be witnessed by bearish MACD signals and sluggish RSI (14).

Hence, the quote is likely to remain depressed unless it stays below the nearby resistance, previous support around $1,632.

Even if the buyers manage to cross the $1,632 hurdle, the 100-EMA and 200-EMA will challenge the upside near $,1650 and $1,665 respectively ahead of directing the run-up towards the late October peak near $1,675.

Alternatively, the aforementioned support line near $1,620 holds the key to the XAUUSD fall towards the 61.8% Fibonacci Expansion (FE) of bullion’s October 04-26 moves, near $1,605. Following that, the $1,600 threshold may act as an extra filter to the south.

Gold: Four-hour chart

Trend: Further downside expected