US Dollar Forecast: Gold Pops, Dollar Steady While Markets Mull Over Jobs Report

U.S. Dollar Strengthens After Mixed Jobs Report

The U.S. dollar climbed on Friday, recovering from earlier losses after a mixed U.S. jobs report for November. While nonfarm payrolls surpassed expectations with 227,000 jobs added, the unemployment rate edged up to 4.2%, its highest level since August. The U.S. Dollar Index (DXY) advanced to 106.064, rebounding after briefly dipping to 105.420, a level not seen since late November.

Dollar Outlook Hinges on Technical Levels

From a technical perspective, DXY’s ability to hold above the 105.722 pivot signals the presence of buyers. A sustained move higher could push the index toward resistance at 106.843. Conversely, renewed selling pressure could drive the index to test the 50-day moving average at 104.597, with further declines potentially targeting the 200-day moving average at 104.073.

The dollar’s performance was mixed against major currencies. It briefly fell below the 150-yen level but stabilized at 150.12. Meanwhile, the euro rose to a three-week high, trading at $1.0597.

Treasury Yields Decline as Rate Cut Bets Rise

U.S. Treasury yields dipped on Friday as traders digested the implications of the jobs data for Federal Reserve policy. The 10-year yield dropped to 4.15%, marking its lowest point since late October, while the 2-year yield fell to 4.08%.

Market participants have sharply increased their expectations of a Federal Reserve rate cut at its December 17–18 meeting, with implied odds exceeding 88% for a 25-basis-point reduction. Analysts note that the decline in the labor force participation rate to 62.5% and the labor force contraction have heightened the focus on a potential rate cut despite the stronger headline jobs number.

Fed Chair Jerome Powell recently emphasized a cautious approach to monetary policy, highlighting resilience in the labor market and persistent inflation pressures.

Gold Faces Continued Pressure Despite Rebound

Gold prices edged higher on Friday, with spot gold rising 0.2% to $2,637.12 per ounce. However, the metal remained on track for a second consecutive weekly decline, shedding 0.5% this week. U.S. gold futures gained 0.4% to $2,659.00.

Outflows from gold-backed ETFs in November, following six months of inflows, underscore weaker sentiment in the gold market. Analysts suggest that recent price movements reflect typical market volatility rather than a shift in fundamentals.

Market Forecast

The U.S. dollar’s short-term outlook remains tied to key technical levels and Federal Reserve expectations. A bullish scenario could emerge if the DXY sustains momentum above 105.722, with potential upside to 106.843. However, bearish risks persist if selling pressure intensifies below 105.420.

Gold is likely to remain under pressure unless Fed policy becomes more dovish than anticipated, which could provide a catalyst for renewed buying. For now, traders will closely watch the December Fed meeting for definitive cues.

More Information in our Economic Calendar.