Gold Update: XAU/USD Remains Under Pressure Even After the NFP Report

As the trading week comes to an end, weakness around gold price action remains evident in the short term. This can be seen in the performance of the past two sessions, where the metal has declined by approximately 0.3%. Although the move has not been particularly aggressive, it highlights that buying pressure continues to struggle to regain control of the market.

What stands out is that this weakness has persisted even after the release of the latest U.S. Nonfarm Payrolls (NFP) report, a development that initially appeared supportive of a less aggressive Federal Reserve in the near term. However, the bond market remains one of the main factors limiting gold's recovery. As long as yields continue to show strength, the precious metal may continue facing difficulties in regaining momentum, leaving room for either a more neutral or weaker short-term environment in the sessions ahead.

Were NFP Data Not Enough?

Markets focused today on the release of the latest NFP report, one of the most important economic indicators in the United States. The report showed that the U.S. economy created 29,000 jobs during September, well below both the 89,000 expected by economists and the 133,000 reported in August.

The result points to a meaningful slowdown in labor market growth and is important because it reduces some of the room available for the Federal Reserve to maintain the aggressive stance that markets had been pricing in just a few weeks ago.

This has already started to be reflected in policy expectations. Markets now see roughly a 77% probability that the Federal Reserve will leave interest rates unchanged at its October 28 meeting. However, the report has not been enough to significantly alter expectations beyond the very short term. For December, markets still assign roughly a 66% probability that rates will move toward 4.25%, while January expectations still include around a 38% probability of rates approaching the 4.50% area.

This suggests that weaker employment data has strengthened the case for a pause in October, but it has not completely removed expectations of higher interest rates in the months ahead.

Source: CMEGROUP

With this in mind, it is important to note that despite the employment report and the modest shift in short-term Federal Reserve expectations, the bond market has shown little sign of losing momentum. As one of gold's main competing markets, U.S. Treasuries continue to display considerable strength, with 10-year Treasury yields remaining above the 5.2% area, levels that continue to support the relative attractiveness of fixed-income investments.

This remains particularly important for gold because the inverse relationship between both markets has been fairly consistent in recent weeks. As yields have continued to advance, the precious metal has struggled to sustain any meaningful recovery. Part of the explanation is that bonds continue to offer attractive returns at a time when gold does not generate income on its own. As a result, the continued strength of the bond market is limiting gold demand and keeping a cautious tone around price action.

Source: TradingEconomics

Taking all of this into account, it appears that the NFP report has been sufficient to moderate expectations of a more aggressive Federal Reserve in the immediate term, but not enough to significantly alter the appeal of the bond market. As long as yields remain elevated, gold may continue facing challenges in regaining momentum, leaving the current sense of indecision and weakness around XAU/USD as a key theme in the sessions ahead.

Gold Technical Forecast

Source: StoneX, Tradingview

• The bearish move remains relevant: Over recent sessions, gold has lost the ability to sustain the bullish trendline that had been developing on the chart. However, the more aggressive wave of selling pressure appears to be moderating, with recent price action beginning to reflect a more balanced environment. For now, the market does not appear to have enough momentum to establish a new dominant trend and, unless more significant technical levels are challenged, a broader phase of neutrality could remain in place over the coming weeks.
   

• RSI: The RSI continues to trade below the 50 neutral level, a reading that keeps short-term bearish momentum relevant within recent price action. As long as this condition persists, the weakness currently affecting gold may continue to play an important role in the near term.
   

• MACD: A slightly different picture can be observed in the MACD, whose histogram continues to develop very close to the 0 neutral line. This reflects growing balance in short-term moving-average momentum and supports the possibility that a more consistent consolidation phase could also become increasingly relevant during the coming sessions.
   

Key Levels to Watch:

• 4 500 USD – Resistencia crucial: An important upside barrier that coincides with the most significant highs on the chart and partially aligns with the 200-period simple moving average. Price action returning toward this level could restore a bullish bias and revive the upward structure observed in previous weeks.
   

• $4,330 – Near-Term Barrier: The market's primary equilibrium zone, respected on multiple occasions during the previous week and also aligned with the 50-period simple moving average. If price action returns to this area, a more evident lack of direction could re-emerge, potentially leading to a broader consolidation phase in the short term.
   

• $4,000 – Critical Support: An important support area that also coincides with a key psychological level for the market. Sustained moves toward this zone could reinforce the dominance of sellers and begin to pave the way for a more structured bearish trend, potentially becoming the dominant technical structure on the chart in the weeks ahead.
   

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25