Gold Price Forecast: XAU/USD trades in a familiar range above $1,750, NFP awaited

• Concerns about China’s indebted property extended some support to the safe-haven gold.
• Hawkish Fed expectations, rallying US bond yields underpinned the USD and capped gains.
• Investors also seemed reluctant to place aggressive bets ahead of the US monthly jobs data.
• Gold Price Forecast: XAU/USD’s path of least resistance appears down, focus on US NFP

Gold regained some positive traction on the last trading day of the week and recovered a part of the previous day's losses. The XAU/USD maintained its bid tone heading into the European session and refreshed daily tops, around the $1,760 region in the last hour, though lacked follow-through. Concerns pertaining to China's indebted property sector resurfaced after Fantasia Holdings – a mid-sized developer – did not make the payment of a $206 million bond maturing on October 3, triggering a formal default. This, in turn, was seen as a key factor that extended some support to the safe-haven precious metal, though a combination of factors capped gains.

A temporary truce in the debt ceiling standoff in the US Congress relieved concerns of a possible government debt default later this month and boosted investors' confidence. In fact, the Senate voted 50-48 to extend the debt ceiling until early December. The bill will now be sent to the House of Representatives for approval before it can be sent to President Joe Biden for his signature. The development triggered a classic risk-on move in the global equity markets. Apart from this, prospects for an early policy tightening by the Fed should hold traders from placing aggressive bullish bets around the non-yielding yellow metal.

Investors seem convinced that the Fed will begin rolling back its massive pandemic-era stimulus as soon as November. The markets also seem to have started pricing in the prospects for an interest rate hike in 2022 amid worries that the continuous surge in crude oil/energy prices will stoke inflation. Hawkish Fed expectations pushed the yield on the benchmark 10-year US government bond to four-month tops, closer to the 1.60% threshold, which continued underpinning the US dollar. This could further act as a headwind for dollar-denominated commodities, including gold, as investors move on the sidelines ahead of the closely-watched US monthly employment figures.

The popularly known NFP report is due for release later during the early North American session and is expected to show that the economy added 488K new jobs in September. Meanwhile, the unemployment rate is expected to edge lower to 5.1% during the reported month from 5.2% in August. Nevertheless, the data will influence market expectations about the next policy move by the Fed. This will drive the USD in the near term and provide a fresh directional impetus to gold prices.

Technical outlook

Looking at the technical picture, the XAU/USD has been oscillating in a familiar trading range since the beginning of this week. This makes it prudent to wait for a sustained break in either direction before placing aggressive bets. Hence, any subsequent move up might continue to face resistance near the $1,770 region, or one-and-half-week tops touched on Monday. The next relevant hurdle is pegged near the $1,774-75 region ahead of the $1,783-84 area, above which bulls are likely to aim back to reclaim the $1,800 round figure. The latter coincides with the very important 200-day SMA and should act as a key pivotal point for short-term traders.

On the flip side, the $1,750-48 region, or the lower boundary of the weekly trading range, now seems to have emerged as immediate strong support. A convincing break below will set the stage for a slide towards the $1,729 intermediate support en-route September monthly swing lows, around the $1,722-21 region. Some follow-through selling would turn gold vulnerable to accelerate the downward trajectory towards challenging the $1,700 mark before eventually dropping to multi-month lows, around the $1,687-86 region touched on August 9.

Technical levels to watch