04 Apr 2025

Gold prices remain under pressure, trading below $3,100, as market participants await the US Nonfarm Payroll (NFP) report for new direction.

On Friday, gold encounters fresh selling pressure, although the potential for further declines appears constrained. The risk-averse sentiment stemming from President Trump's tariffs may continue to support the appeal of the precious metal. Additionally, expectations of a Federal Reserve interest rate cut are weighing on the US dollar, which in turn helps to mitigate losses for the XAU/USD pair.

Currently, gold (XAU/USD) is exhibiting a bearish trend during the early part of the European trading session, having fallen for the second consecutive day. This decline does not seem to be driven by any significant fundamental factors and may be linked to market repositioning ahead of the important US employment data, specifically the NFP report.

At the same time, concerns regarding the potential economic repercussions of President Trump's extensive reciprocal tariffs could provide support for gold prices. Furthermore, the anticipation that the Federal Reserve may soon resume its rate-cutting strategy, in response to a slowdown in the US economy driven by tariffs and a weakening US dollar, is likely to limit the extent of losses for the non-yielding bullion.

Daily Digest Market Movers: Gold Prices Decline as Traders Adjust Positions Ahead of US Employment Data

Gold prices experienced selling pressure for the second consecutive day on Friday. However, a mix of factors is likely to provide support and prevent any significant decline from the recent record highs.

Late Wednesday, US President Donald Trump unsettled global financial markets by announcing reciprocal tariffs of at least 10% on all imported goods, which could adversely affect the global economy.

Traders have heightened their expectations that the Federal Reserve will initiate a rate-cutting cycle in June, anticipating four reductions in borrowing costs by the end of the year, as concerns over a potential US recession are reignited by Trump's trade policies.

The yield on the benchmark 10-year US government bond has fallen below 4.0% for the first time in six months, failing to help the US Dollar maintain its overnight recovery from a multi-month low.

Additionally, data released on Thursday indicated a slowdown in economic activity within the US services sector for March, with the ISM Services PMI dropping to 50.8 from 53.5 in February, falling short of expectations.

In a separate report, the US Department of Labor noted a decrease in new unemployment insurance applications, with filings dropping to 219K for the week ending March 29, down from 225K previously.

This fundamental landscape is favorable for XAU/USD bulls. Therefore, the slight decline in gold prices can be attributed to traders adjusting their positions ahead of the upcoming monthly US employment report.

The widely anticipated US Nonfarm Payrolls (NFP) report is expected to reveal that the US economy added 135K new jobs in March, while the Unemployment Rate is projected to remain steady at 4.1%.

Gold price bears retain intraday control below $3,100 mark; $3,056-3,054 support holds the key

From a technical standpoint, any further decline may encounter significant support in the $2,056-2,054 horizontal range. This zone aligns closely with the 100-period Simple Moving Average (SMA) on the 4-hour chart and is expected to serve as a crucial pivot point for short-term traders. A decisive breach below this level could lead to increased technical selling, potentially making the Gold price susceptible to a deeper corrective move towards the intermediate support levels of $3,036-3,035, ultimately heading towards the psychological threshold of $3,000.

Conversely, the $3,115-3,125 congestion zone appears to present an immediate obstacle. Following this, resistance is anticipated around the $3,143 mark and the all-time high near the $3,157-3,158 range reached on Thursday. If this resistance is surpassed, it could act as a new catalyst for bullish traders, thereby paving the way for a continuation of the Gold price's well-established upward trend observed over the past four months.