Gold extends range play below $4,200; looks to US NFP for fresh impetus

• Gold remains confined in a range as traders opt to wait for the release of the US NFP report.
• The USD stands firm near a one-and-a-half-year top, acting as a headwind for the commodity.
• Oil-driven inflation fears keep US bond yields near multi-year highs, further capping the bullion.

Gold (XAU/USD) steadies below the $4,200 mark during the first half of the European session on Friday as traders keenly await the release of US employment details. The US Nonfarm Payrolls (NFP) report is expected to show the economy added only 90K jobs in September, down from the previous month's reading of 162K. Meanwhile, the Unemployment Rate is anticipated to hold at 4.1%. Adding to this, annual wage inflation, as measured by the change in Average Hourly Earnings, will offer fresh cues about the Federal Reserve's (Fed) future policy path amid receding October rate-hike bets. This, in turn, will drive the US Dollar (USD) and provide some meaningful impetus to the non-yielding bullion.

A slew of influential FOMC members recently indicated that they do not see an urgent need for an immediate interest rate hike after the widely expected quarter-point increase at the September meeting. Meanwhile, the Institute for Supply Management (ISM) reported on Thursday that economic activity in the US manufacturing sector expanded for the ninth straight month in September. Additional details of the survey revealed that raw material prices increased for a 24th consecutive month. This comes on top of inflationary concerns stemming from volatile energy prices, which underpin prospects for additional Fed tightening and help limit the overnight pullback in US bond yields from multi-year highs. Apart from this, the US-Iran standoff continues to support the USD and acts as a headwind for the commodity.

The Wall Street Journal reported that the Pentagon may soon send a third aircraft carrier strike group and 10,000 sailors and Marines to the Persian Gulf. Separately, Iran’s Persian Gulf Strait Authority (PGSA) said several tankers were attacked in the Strait of Hormuz in recent days. Adding to this, US President Donald Trump said on Wednesday that he would decide very soon whether to blow up Iran and added that the war will end very soon one way or the other. This keeps the geopolitical risk premium firmly in play and favors USD bulls, warranting some caution for XAU/USD bulls. Hence, it will be prudent to wait for strong follow-through buying before confirming that the Gold price has formed a near-term bottom around the $4,100 mark and positioning for any meaningful appreciation move.

XAU/USD 4-hour chart

Technical Analysis

The XAU/USD pair keeps a bearish near-term tone below the 200-period Simple Moving Average (SMA) on the 4-hour chart and the mid-range Fibonacci retracements. However, the Moving Average Convergence Divergence (MACD) indicator remains in positive territory with the line above its signal and a still-constructive histogram. Meanwhile, the Relative Strength Index (RSI) around 43 hints at a potential pause in the downside rather than a clear bullish reversal.

Hence, any positive move beyond the $4,200 mark is more likely to confront immediate resistance near the 61.8% retracement at $4,230. The 50% level at $4,319 forms the next nearby topside barrier ahead of the 200-period SMA at $4,386 and the 38.2% retracement at $4,408. This reinforces a dense supply zone, with the 23.6% retracement at $4,519 marking a more distant cap that would need to be reclaimed to meaningfully challenge the current bearish bias. On the downside, initial support is seen at the 78.6% Fibo. retracement at $4,103, ahead of the prior swing low near $3,942.

(The technical analysis of this story was written with the help of an AI tool. Know more.)