Gold Price Forecast XAU/USD – Extending Losses at Mid-Session Following Hot US Jobs Report

Gold futures are plunging at the mid-session on Friday, hitting a three-week low after hotter-than-expected U.S. labor market data increased fears that the Federal Reserve could keep raising interest rates in an effort to tame inflation.

At 17:11, April Comex gold futures are trading $1878.20, down $52.60 or -2.72%. The SPDR Gold Shares ETF is at $173.43, down $4.47 or -2.51%.

Pressured by Rising Fed Rate Hike Expectations

Earlier in the session, the U.S. government reported that employment growth accelerated sharply in January, with 517,000 positions added, almost double the gain in December. The unemployment rate hit its lowest level since May 1969, coming in at 3.4%. Average Hourly Earnings were 0.3%, but the previous month was revised higher to 0.4%.

Not only did the data point to a persistently tight labor market, but it also supported the argument that the Fed might have to remain a little bit more aggressive going forward.

At the mid-session, financial market traders increased the odds for a 25-basis-point rate hike at the Fed’s March meeting. But they also changed their target of the U.S. central bank’s benchmark interest rate. They now see the Fed’s terminal rate peaking at 4.95% by June compared to 4.88% earlier.

Short-Term Outlook

Essentially it is soaring U.S. Treasury yields and a spike in the U.S. Dollar weighing on gold prices. Higher rates make non-yielding gold a less-attractive investment, while a rising greenback tends to drive down foreign demand for dollar-denominated bullion.

Daily April Gold Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down earlier in the session when sellers took out the main bottom at $1915.50. A trade through $1975.20 will change the main trend to up.

The nearest resistance is a long-term Fibonacci level at $1889.50 and a minor 50% level at $1909.30. The closest support is a short-term 50% level at $1862.40, followed by a long-term 50% level at $1843.40.

Essentially, the longer-term term direction will be determined by trader reaction to the retracement zone at $1843.40 to $1889.50. Bearish under $1843.40 and bullish over $1889.50.

Daily April Gold Technical Forecast

Trader reaction to the long-term Fib level at $1889.50 will determine the direction of the April Comex gold futures market into the close on Friday.

Bearish Scenario

A sustained move under $1889.50 will indicate the presence of sellers. This could extend the selling into a pair of 50% levels at $1862.40 and $1843.40.

Bullish Scenario

A sustained move over $1889.50 will signal the return of buyers with $1909.30 the first target, followed by an intraday pivot at $1924.90, followed by the main top at $1975.20.