Gold (XAUUSD) Price Forecast: Weak NFP Could Spark Gold Breakout Over $5143.89

Gold Edges Higher Ahead of Critical NFP Report

Spot Gold is edging higher on Wednesday, underpinned by lower Treasury yields and a weaker U.S. Dollar, ahead of today’s U.S. Non-Farm Payrolls report that could have a direct impact on Federal Reserve policy.

At 10:50 GMT, XAUUSD is trading $5100.75, up $75.63 or +1.50%.

Weak NFP and Major Revisions Could Force Fed’s Hand

In today’s January jobs report, due to be released at 13:30 GMT, the monthly numbers are not only expected to be weak, but revisions could show the entire past year was weaker than expected. That would be a major shift in the labor market narrative, solidifying a Fed rate cut for June, but also opening up the possibility of a March rate cut.

As of this morning, the consensus is about 66,000, but there are some analysts calling for no growth, so anything around zero or negative would show just how fragile conditions are. Other analysts say the no-growth scenario is happening with few layoffs so far. However, a pickup in layoffs could eventually lead to job losses.

If the job report hits the consensus, then the unemployment rate could come in at about 4.4%, with annual wage gains of 3.7%.

Annual job revisions due Wednesday could slash 2024’s and 2025’s reported job gains by up to 900,000, revealing a much weaker labor market than previously thought—bullish for gold if it forces earlier Fed rate cuts.

Falling Yields and Weaker Dollar Boost Gold

Weighing on the U.S. Dollar and helping to drive gold prices higher today are benchmark 10-year Treasury yields, which fell to a near one-month low yesterday after data showed a dip in core U.S. retail sales in December and downward revisions to November and October figures.

The weaker yields drove the U.S. Dollar to near a two-week low. This is helping to boost gold prices since it likely drove up foreign demand for dollar-denominated gold.

Technical Picture: Breakout Above $5143.89 Opens Door to Record High

Technically, the main trend is up according to the swing chart and the 50-day moving average. Taking out the swing top at $5091.93 will reaffirm the uptrend. Minor support is a swing bottom at $4655.23. The major support is the 50-day moving average at $4597.39 and the February 2 main bottom at $4402.38.

Swing chart analysis has also revealed a major value zone at $4747.15 to $4541.88. Currently, the market is trading inside a minor retracement zone at $5002.31 to $5143.89. I think the upper level at $5143.89 is a potential trigger point for an acceleration to the upside. The daily chart shows that if buyers can take out this level with conviction, the market can move unimpeded to $5602.23.

If $5002.31 is taken out with conviction, then sellers could drive prices into the support zone and the 50-day moving average, where long-term investors will try once again to establish a solid support base before making another run at a record high later in the year.

More Information in our Economic Calendar.