Gold (XAU/USD) advanced to the $4,200 neighborhood, marking a one-and-a-half-week high and extending its recovery for the third consecutive day on Friday [1]. This move positions gold for its first weekly gain in five weeks, as traders trimmed bets on further US Federal Reserve interest rate hikes following weaker-than-expected US employment data [1]. The US Nonfarm Payrolls (NFP) report revealed that only 57,000 new jobs were added in June, significantly below the consensus estimate of 110,000. Additionally, the previous month's figure was revised down from 172,000 to 129,000, while the unemployment rate edged lower to 4.2% [1].
The softer labor market data, combined with easing inflation concerns amid a recent slump in crude oil prices, has led traders to shift their expectations from one to two Fed rate increases in 2026 to between zero and one hike [1]. This has kept the US Dollar (USD) near a two-week low, further supporting gold prices [1]. However, ongoing geopolitical tensions, particularly uncertainty over US-Iran talks and warnings from Iran’s military regarding the Strait of Hormuz, have maintained a geopolitical risk premium that could support the USD and potentially cap gold’s gains [1].
Technical analysis indicates that gold’s intraday breakout above the 100-period Simple Moving Average (SMA) and the 23.6% Fibonacci retracement level of the April-June decline supports a constructive near-term outlook. The Relative Strength Index (RSI) is near 68, approaching overbought territory, while the Moving Average Convergence Divergence (MACD) remains positive and rising [1].
Looking ahead, trading volumes are expected to be low on Friday due to the closure of US stock and bond markets for Independence Day. Nonetheless, the fundamental backdrop appears to favor further appreciation in gold, with any corrective pullbacks likely to be limited [1].
CONCLUSION
Gold’s rally to $4,200 is underpinned by weaker US jobs data and reduced expectations for Fed rate hikes, which have weighed on the US Dollar. While geopolitical risks could temper further gains, the technical and fundamental outlook remains positive for gold in the near term.