Gold price initially surged on Friday following the release of a below-expectations US Nonfarm Payrolls report, which saw payrolls rising 175K versus the forecast of 243K. Average Hourly Earnings, the Unemployment Rate, and Average Weekly Hours worked also fell short of expectations. However, the Gold price (XAU/USD) soon gave back all its gains, dropping to around $2,280s from the peak of $2,310s after bears took over, leading to an overall loss for the day.
The positive sentiment in the market on Friday may have contributed to the decline in Gold price, as the precious metal typically performs better during periods of crisis due to its safe-haven appeal. The rally in US stocks, with the S&P 500 Index up 0.92%, may have diverted attention away from Gold. Despite the initial surge in Gold price following the NFP report, the overall tone of the market led to the decline in the precious metal’s value.
The NFP report showed 175K new workers joined the workforce in April, below the expected 243K. Average Hourly Earnings also came in softer than estimates, suggesting reduced inflationary pressures and potentially leading to Fed interest rate cuts. The US Dollar Index (DXY) fell after the report, as the expectation of lower interest rates weighs on the USD. Other data in the report, such as the drop in Average Hours Worked and the Unemployment Rate ticking down to 3.9%, also influenced market sentiment.
Technical Analysis of Gold price on the 4-hour Chart shows a rebound after meeting the conservative objective for completing its bearish Measured Move pattern at the Fibonacci 0.681 price objective for wave C. Gold’s direction is unclear, with the possibility of further downside if it breaks below the 0.681 Fibonacci target lows at $2,285, or a more bullish environment if it breaks above the cluster of Moving Averages and the peak of wave B at around $2,350. The long-term trend for Gold remains up, supporting the outlook on lower time frames.
The ISM Services PMI, a leading indicator of business activity in the US services sector, showed a deeper-than-expected decline in April, falling to 49.4 when a rise to 52.0 was forecast. A reading below 50 signals a decline in services sector activity, which is seen as bearish for the USD. Overall, the market response to the NFP report and other economic indicators influenced the Gold price movement, reflecting the impact of market sentiment and economic data on precious metal prices.
