Gold Price Forecast: XAU/USD retreats further from all-time high ahead of US NFP report

• Gold price extends the overnight pullback from an all-time high and continues losing ground on Friday.
• Rebounding US bond yields drives flows away from the XAU/USD ahead of the key US NFP report.
• The Federal Reserve’s less hawkish outlook and a softer US Dollar should help limit further losses.

Gold price comes under some selling pressure on the last day of the week and retreats further from the all-time high, around the $2,078-$2,079 region touched on Thursday. The XAU/USD extends its descent through the first half of the European session and drops to the $2,037 area, or a fresh daily low in the last hour.

Gold price drifts lower ahead of Nonfarm Payrolls (NFP) report

A sharp intraday rise in the United States (US) government bond yields turns out to be a key factor driving flows away from the non-yielding Gold prices. This, along with some repositioning trade ahead of the closely-watched US monthly jobs data, exerts some pressure on the XAU/USD. The popularly known Nonfarm Payrolls (NFP) report is due for release later during the early North American session and is expected to show that the US economy added 179K jobs in April, down from 236K in the previous month. The jobless rate, meanwhile, is anticipated to hold steady at 3.5% during the reported month. Apart from this, investors will take cues from Average Hourly Earnings for fresh insight into the possibility of any further rise in inflationary pressures, which, in turn, should provide some meaningful impetus to the metal.

A combination of factors should help limit any further losses

In the meantime, concerns about the US banking sector and the Federal Reserve's (Fed) less hawkish outlook should help limit the downside for Gold price. Investors remain worried about a full-blown banking crisis in the US and that regional lender PacWest Bancorp could be the next potential domino to fall. The US central bank, meanwhile, outlined a more stringent and data-driven approach to hiking rates further. Moreover, Fed Chair Jerome Powell earlier this week signalled that the central bank was close to hitting the terminal rate. Investors took this as a sign that the central bank could pause its year-long rate-hike cycle sooner rather than later. This, along with the concerns over the US debt ceiling, attracts fresh sellers around the US Dollar (USD) and could further lend some support to the US Dollar-denominated commodity.

XAU/USD remains on track to register strong weekly gains

Nevertheless, Gold price, for now, seems to have snapped a three-day winning streak, though remains on track to register strong weekly gains of nearly 3%. Moreover, the aforementioned fundamental backdrop makes it prudent to wait for strong follow-through selling before confirming that a near-term top has been formed and positioning for any meaningful corrective decline.

Gold price technical outlook

From a technical perspective, the overnight swing low, around the $2,030 level, might protect the immediate downside ahead of the $2,020 region and the $2,012-$2,010 resistance breakpoint, now turned support. This is followed by the $2,000 psychological mark, which should act as a pivotal point. Failure to defend the said support level might prompt some technical selling and drag the Gold price back towards the $1,980-$1,970 strong horizontal support.

On the flip side, the $2,050-$2,053 area now seems to have emerged as an immediate hurdle. Some follow-through buying has the potential to lift the Gold price back towards the all-time high, around the $2,078 region touched on Thursday. The momentum could get extended further and allow bullish traders to aim to capture the $2,100 round-figure mark.

Key levels to watch