Gold Price Forecast: XAU/USD holds steady near $1,980, over one-week top ahead of US NFP

• Gold price climbs to over a one-week high on Friday and is supported by a weaker US Dollar.
• Diminishing odds for another Federal Reserve rate hike in June continue to weigh on the buck.
• The upbeat market mood caps gains for the safe-haven XAU/USD ahead of the US NFP report.

Gold price builds on this week's goodish rebound from the $1,932 area, or its lowest level since March 17 and gains some follow-through traction for the fourth successive day. The XAU/USD sticks to its positive tone through the first half of the European session and currently trades around the $1,980 region, just below a one-and-half-week high touched earlier today.

Weaker US Dollar lends some support to Gold price

The US Dollar (USD) remains under some selling pressure on the last day of the week and retreats further from a two-and-half-month high touched on Wednesday amid hopes for a pause in the Federal Reserve’s (Fed) rate-hiking cycle. In fact, comments by a slew of influential Fed officials this week forced investors to scale back their expectations for another 25 basis points (bps) lift-off at the next Federal Open Market Committee (FOMC) on June 13-14. This has been a key factor behind the recent sharp decline in the United States (US) government bond yields, which continues to weigh on the Greenback and is seen benefitting the US Dollar-denominated Gold price.

A positive risk tone acts as a headwind for the XAU/USD

The upside for the XAU/USD, however, remains capped, at least for the time being, amid a generally positive tone around the equity markets, which tends to dent demand for traditional safe-haven assets. A slightly better-than-expected private survey on Thursday, showing that China's manufacturing sector unexpectedly registered modest growth in May, raised hopes for hopes of a recovery in the world's second-largest economy. The passage of bipartisan legislation to lift the government's $31.4 trillion debt ceiling and avert an unprecedented American default boosts investors' confidence. This, in turn, is acting as a headwind for the safe-haven Gold price.

Focus remains glued to US monthly jobs report (NFP)

Traders also seem reluctant to place aggressive bets and prefer to wait for the release of the US monthly employment details, due later during the early North American session. The popularly known Nonfarm-Payrolls (NFP) report will influence market expectations about the Fed's next policy move, which will drive the USD demand in the near term and provide some meaningful impetus to the non-yielding Gold price. Nevertheless, the XAU/USD remains on track to register its biggest weekly gain in nearly two months and snap a three-week losing streak.

Gold price technical outlook

From a technical perspective, some follow-through buying beyond the $1,985-$1,986 region should pave the way for additional gains and allow Gold price to reclaim the $2,000 psychological mark. The momentum could get extended towards the next relevant hurdle near the $2,008-$2,010 area, above which the XAU/USD could climb further towards the $2,035-$2,037 resistance zone.

On the flip side, the $1.970 static support could protect the immediate downside ahead of the $1,954-$1,952 region and the 100-day Simple Moving Average (SMA), currently pegged near the $1,940-$1,939 area. This is followed by the multi-month low, around the $1,932 zone, which if broken will be seen as a fresh trigger for bears and make the Gold price vulnerable to weaken further towards the $1,900 mark.

Key levels to watch