Gold (XAU/USD) consolidated below $4,250 during the Asian session on Friday, pausing after a retracement from its highest level since June 18. Market participants exhibited caution, refraining from aggressive bets ahead of the crucial US Nonfarm Payrolls (NFP) report, amid ongoing geopolitical uncertainties and expectations for US Federal Reserve policy action [1].
Geopolitical developments contributed to the cautious sentiment. Saudi Arabia cited an intelligence report indicating Iraqi militias were coordinating with Yemen's Houthis for an imminent attack on the kingdom. Additionally, Iranian state news reported a framework agreement over the management of the Strait of Hormuz that would prohibit passage of US, Israeli, and hostile vessels until compensation was paid. These developments dampened hopes for a diplomatic resolution to the five-month-old US-Iran war, supporting the safe-haven US Dollar and capping gold's upside [1].
The US-Iran standoff, combined with missile attacks on Saudi oil tankers by Yemen's Iran-aligned Houthis, heightened concerns about energy supply disruptions and helped crude oil prices maintain Thursday's strong gains. Investors worried that elevated oil prices could rekindle inflationary pressures, potentially prompting the US Federal Reserve and other major central banks to adopt a more hawkish stance. According to the CME Group's FedWatch Tool, traders are pricing in over an 80% chance that the Fed will raise borrowing costs by the end of this year, favoring USD bulls and warranting caution before positioning for a renewed gold rally from the $4,000 psychological mark [1].
Analysts at OCBC noted that 'near-term momentum has improved,' with the upcoming US payrolls report seen as 'key to whether the decline in yields, USD and gold’s breakout can be sustained.' Gold was last seen at $4,247, with daily momentum described as mildly bullish and the RSI near overbought conditions. Technical resistance levels were identified at $4,333 (23.6% Fibonacci retracement of 2026 high to low) and $4,393 (100 DMA), while support was noted at $4,160 (50 DMA) and $4,077 (21 DMA). OCBC suggested a constructive bias but emphasized that the sustainability of the recent move depends on the tone of US data [1].
CONCLUSION
Gold prices are consolidating below recent highs as traders await the US NFP report and weigh persistent geopolitical risks and expectations for further Fed rate hikes. While technical momentum remains mildly bullish, the market's next direction will likely hinge on upcoming US economic data and ongoing geopolitical developments.