Gold prices are pushing higher Friday following Thursday’s disappointing US Nonfarm Payrolls report, which has weakened the dollar and reduced market expectations for near-term Federal Reserve rate hikes. The XAU/USD pair continues its upward momentum as traders reassess the Fed’s policy trajectory in light of softer-than-anticipated employment data.
The weaker NFP figures are applying downward pressure on the greenback, creating a favorable environment for the non-yielding precious metal. With employment growth falling short of forecasts, market participants are now pricing in a lower probability of imminent monetary tightening by the Federal Reserve. This shift in rate expectations typically benefits gold, as lower interest rates reduce the opportunity cost of holding the asset while simultaneously weighing on dollar strength.
Forex traders and commodity investors should monitor upcoming Fed communications closely, as any hawkish rhetoric could reverse current positioning. For now, the path of least resistance for gold appears tilted to the upside.
FXnCO Insight
Traders should watch gold’s ability to hold gains above key technical levels, as continued dollar weakness could accelerate precious metals momentum into next week.
Source: FXStreet