XAU price stalls intraday recovery as traders await US NFP report for Fed rate cut cues

• Gold price stages a goodish recovery from over a one-week low touched earlier this Friday.
• A softer risk tone, geopolitical risks, and trade war fears benefit the safe-haven commodity.
• Bets for a less dovish Fed cap gains for the XAU/USD ahead of the crucial US NFP report.

Gold price (XAU/USD) witnessed an intraday turnaround from a one-and-half-week low touched earlier this Friday and sticks to modest recovery gains, around the $2,640 level heading into the European session. The US Dollar (USD) languishes near a multi-week low on the back of the recent decline in the US Treasury bond yields. This, along with bets that the Federal Reserve (Fed) will lower borrowing costs later this month and a slight deterioration in the global risk sentiment, turn out to be key factors supporting the safe-haven precious metal. 

Meanwhile, expectations that US President-elect Donald Trump’s policies will boost inflation continue to fuel hopes for a less dovish Fed. This, in turn, is seen acting as a tailwind as a tailwind for the USD and keeping a lid on any further gains for the non-yielding Gold price. Traders also seem reluctant and keenly await the release of the US Nonfarm Payrolls (NFP) report before placing directional bets. The data will be looked for more cues about the Fed’s rate cut path, which will drive the USD and provide a fresh impetus to the XAU/USD. 

Gold price lacks follow-through buying as traders seem reluctant ahead of the key US NFP report

• The recent remarks from several influential FOMC members, including Federal Reserve Chair Jerome Powell on Wednesday, suggested that the US central bank could pause its rate-cutting cycle.
• This, in turn, drags the non-yielding Gold price to over a one-week low on Friday, though a combination of factors offers some support to the bullion and helps limit any further depreciating move. 
• Russia has shown no sign of fatigue in a nearly two-year-old conflict with Ukraine and pounded the country’s east during the past week with long-range weapons and sustained ground assaults. 
• Concerns about US President-elect Donald Trump’s trade tariffs and their effect on the global economic outlook temper investors’ appetite for riskier assets and lend support to the safe-haven XAU/USD. 
• According to the CME Group’s FedWatch Tool, traders are pricing in a 70% chance that the Fed will lower borrowing costs by 25 basis points at the December meeting and a 30% probability of a pause. 
• Rate cuts bets held broadly steady after the US Department of Labor (DoL) reported on Thursday that Initial Jobless Claims rose to 224K for the week ended November 29, from 215K in the previous week. 
• The benchmark 10-year US Treasury yield languishes near its lowest level since October 22 and keeps the US Dollar depressed near a multi-week low, offering additional support to the precious metal.
• Investors keenly await the release of the US Nonfarm Payrolls (NFP) report, which might offer cues about the Fed’s rate-cut path and determine the near-term trajectory for the USD and the commodity. 

Gold price needs to break through the $2,655 barrier to support prospects for further gains

From a technical perspective, an intraday breakdown below the 100-period Simple Moving Average (SMA) on the 4-hour chart and a short-term trading range support near the $2,633-2,632 area was seen as a key trigger for bearish traders. The subsequent swift recovery, however, warrants some caution before positioning for any further losses. Meanwhile, any further move up is likely to confront some resistance near the $2,649 region ahead of the $2,655 supply zone. Some follow-through buying beyond last Friday’s swing high, around the $2,666 area will shift the bias in favor of bulls and allow the Gold price to reclaim the $2,700 mark.

On the flip side, the Asian session low, around the $2,614-2,613 region, now seems to act as immediate strong support ahead of the $2,605-2,600 area. This is followed by the 100-day SMA, currently around the $2,583 zone, below which the Gold price could slide to the November monthly swing low, around the $2,537-2,536 area. The downward trajectory could extend further and eventually drag the XAU/USD to the $2,500 psychological mark.