HG MARKETS:

Gold (XAU/USD) recovers intraday losses and trades higher around $2,640 during North American trading hours on Friday, as investors position themselves ahead of the November Nonfarm Payrolls (NFP) data from the United States. The employment report is widely regarded as a key indicator for Federal Reserve (Fed) interest rate decisions, especially with the upcoming policy meeting scheduled for December 18.

The Fed’s interest rate outlook remains under scrutiny, particularly as policymakers shift focus toward preserving labor demand. Following the central bank’s decision to begin reducing borrowing rates in September, market expectations for December indicate a 72% probability of a 25 basis points (bps) rate cut to a range of 4.25%-4.50%, according to the CME FedWatch tool. The remaining 28% foresee rates remaining unchanged.

Lower interest rates typically support Gold prices by reducing the opportunity cost of holding the non-yielding asset, making it an attractive safe haven in a lower-rate environment. Economists anticipate the US economy to have added 200,000 jobs in November, a significant rebound from the 12,000 increase in October, when employment figures were impacted by hurricanes. The Unemployment Rate is projected to rise slightly to 4.2% from 4.1%.

Additionally, market participants will closely monitor the Average Hourly Earnings data for insights into wage growth trends. Earnings are expected to increase by 3.9% year-over-year, a marginal slowdown from October’s 4.0% growth. The US Dollar Index (DXY), which measures the Greenback against six major currencies, holds steady near its key support at 105.70. Meanwhile, the yield on the 10-year US Treasury note has risen to approximately 4.19%, reflecting cautious sentiment ahead of the labor market data.

Gold prices remain near the upward-sloping trendline around $2,650, originating from the February low of $1,984 on the daily chart. The metal is oscillating close to its 20-day Exponential Moving Average (EMA), which is also positioned at $2,650.

The 14-day Relative Strength Index (RSI) hovers in the neutral 40-60 range, indicating a lack of clear directional bias. Key support for Gold lies at the November low of $2,537. On the upside, the October high and all-time peak of $2,790 serves as critical resistance levels for the precious metal. Investors will likely see significant price action in Gold following the release of the NFP data, as the report could further shape expectations for the Fed’s interest rate trajectory.