Gold drifts lower as rebounding bond yields and a stronger US Dollar weigh on the metal, with traders awaiting the October NFP report to gauge the next move for Federal Reserve policy.
Gold failed to hold above $4,100 and is extending Thursday's slide as recovering US bond yields and a stronger USD weigh on the metal. Traders are holding back ahead of the October NFP report (forecast 65K vs prior 29K, unemployment at 4.2%), limiting downside. Gold still trades above the $4,000 mark with support at $4,039 and $4,006.
Gold slid back below $4,100 because recovering US bond yields are lifting the US Dollar, which makes gold less attractive, and traders are avoiding big bets before Friday's US jobs report.
Support sits at the 38.2% Fibonacci level near $4,039 and the 50.0% level near $4,006, with further floors at $3,973 and $3,926; resistance is at $4,080 and then the cycle high at $4,146.
The USD is building on its recovery from the lowest level since late September, helped by a bounce in US bond yields and ~70% market pricing of a Fed rate hike in December. Safe-haven demand from Trump's comments on Iran also supports the buck. The NFP report (65K forecast) could add volatility and further drive USD demand.
A bounce in US bond yields from a two-month low, expectations that the Fed may raise rates again in December, and safe-haven demand tied to tensions with Iran are all supporting the dollar.
Friday's US Nonfarm Payrolls report, forecast at 65K new jobs versus 29K last month, plus Average Hourly Earnings, could heavily influence Fed expectations and USD demand.
US bond yields recovered slightly on Friday after falling to a two-month low, driven by traders pricing around a 70% chance of a Fed rate hike in December and by a sharp overnight recovery in crude oil prices that reignited inflation concerns. A rising yield environment supports the dollar but weighs on gold.
Yields bounced after recently falling to a two-month low because markets still see about a 70% chance of a Fed rate hike in December and a rebound in oil prices revived inflation worries.
Gold prices retreated from two-week highs on Friday as a rebound in US Treasury yields and a stronger dollar pressured the bullion. Investors are now sidelined ahead of the critical US Nonfarm Payrolls report, which is expected to show 65,000 new jobs added in October. While geopolitical tensions and inflation concerns persist, the market is currently pricing in a 70% probability of a Federal Reserve rate hike in December.
Gold slid back below $4,100 because recovering US bond yields are lifting the US Dollar, which makes gold less attractive, and traders are avoiding big bets before Friday's US jobs report.
A bounce in US bond yields from a two-month low, expectations that the Fed may raise rates again in December, and safe-haven demand tied to tensions with Iran are all supporting the dollar.