Gold continues to find support from safe-haven demand and long-term investors, balancing out the pressure caused by lower expectations of significant interest rate cuts in the US. Technically, XAU/USD is still consolidating within its broader medium- and long-term uptrend.
On Monday, Gold prices stayed in a range between $2,630 and $2,670, despite initially dipping due to better-than-expected US employment data. The release of the US Nonfarm Payrolls (NFP) report for September showed 254,000 jobs added—well above the 140,000 forecast—while the unemployment rate dropped to 4.1% from 4.2%. This strong labor market performance has calmed fears of a “hard landing” for the US economy.
The NFP data is particularly important because the US labor market has become the Fed’s key focus since August, shifting its attention away from inflation. With this robust job report, the chances of the Fed enacting another aggressive 50 basis point rate cut in November have vanished. Before the NFP release, markets had priced in a 35% chance of such a cut, but that probability has now fallen to zero. In fact, there’s now a slight chance the Fed might not cut rates at all in November, according to the CME Fed-Watch Tool.
Following the NFP report, Gold prices dipped to around $2,632 on Friday. Higher interest rates tend to hurt Gold because it doesn’t yield interest, and a stronger US Dollar—bolstered by the higher rate outlook—makes it more expensive for foreign buyers.
Safe-Haven Demand Boosts Gold
Despite the pressure from strong US data, Gold has found continued support due to its role as a safe-haven asset, especially as the Middle East conflict intensifies. Reports indicate Israeli forces destroyed a mosque in southern Lebanon, further escalating tensions. Markets are also on edge as Israel is expected to launch a retaliatory attack on Iran, which fired 200 missiles in response to the death of Hezbollah leader Hassan Nasrallah.
In addition to geopolitical factors, hopes for a recovery in demand from China are also supporting Gold prices. China, the largest market for Gold, has announced a major stimulus package aimed at boosting its economy, which could lift demand for the yellow metal. Furthermore, a global trend of declining interest rates—despite the recalibration of US rates—helps Gold maintain its appeal as a long-term investment asset.
Technical Analysis: Gold Consolidation Continues
Gold is currently trading sideways in a narrow range, as seen on the 4-hour chart, with strong support at the trendline. The immediate trading range has a ceiling at $2,673 (the high from October 1) and a floor at $2,632 (the low from October 4). A trendline also provides additional support in the mid-$2,440s.
The short-term trend is neutral, with prices expected to continue oscillating between these levels. If Gold breaks above $2,673, it could resume its upward momentum, potentially reaching the $2,700 mark. Conversely, if prices fall below $2,632, they may drop further to around $2,625 (the low from September 30), with $2,600 offering another potential support level.
In the bigger picture, Gold remains in a long-term uptrend, and once this current phase of consolidation is over, it’s more likely to resume its upward trajectory. A clear breakout above the top or below the bottom of the range will signal the next directional move.
