Market Analysis

The price of gold (XAU/USD) trades somewhat negatively during the opening part of Friday's European session, but it still manages to stay above a low that has been there for about a month and stays inside the weekly range. 

Now, traders appear hesitant and choose to stay away from the market before the highly anticipated US monthly employment data is released. The widely publicized Nonfarm Payrolls (NFP) report has the potential to impact future policy decisions made by the Federal Reserve (Fed), which will ultimately determine the next step in the direction of the non-yielding yellow metal.

Growing consensus that the US central bank will maintain higher interest rates for an extended period of time in response to persistently sticky inflation is perceived as acting as a drag on the price of gold going into the key data concerns. 

In addition, the generally upbeat outlook for the equities markets is seen to be another factor eroding demand for the precious metal that serves as a safe haven. Nevertheless, the Fed's less aggressive stance, which suggests that it is still inclined to cut borrowing costs, may keep supporting the XAU/USD and assist contain any significant corrective slide. 

Technical Analysis: The price of gold is still stuck in the weekly range, and bullish traders should focus on the $2,080 support level.

Technically speaking, the range-bound price action that has been present since the start of this week forms a rectangle on short-term charts and indicates a phase of consolidation. 

Furthermore, neutral oscillators on the daily chart validate the short-term trajectory for the price of gold and advise aggressive traders to proceed with prudence. 

Therefore, any additional weakness below $2,300 may continue to find strong support in the $2,285-2,280 range, which should open the door for larger losses if it is broken. Then, the XAU/USD pair may accelerate its decline toward the next significant support located in the vicinity of $2,268–2,265 on its way to the $2,230–2,25 zone and the $2,200 round number.

Conversely, the $2,326-2,328 area appears to be a barrier that stands in the way of the $2,335 supply zone and the weekly peak, which is located in the $2,346-2,347 range. 

A persistent increase above will validate a break out of the short-term trading range and push the price of gold up to the resistance level of $2,371-2,372. The momentum may continue in the direction of the $2,400 barrier and the record high, which was reached on April 12 in the $2,431-2,432 range.

Paraphrasing text from "FX Street" all rights reserved by the original author.