The Gold price (XAU/USD) witnessed a reversal of fortunes on Friday, relinquishing all the gains it initially made following the release of the Nonfarm Payrolls report. Initially, the precious metal surged to around $2,310s, marking an over half a percent gain, in response to the US Nonfarm Payrolls (NFP) report falling below analysts’ expectations. However, a shift in market sentiment saw bears taking control, pushing the Gold price lower, and it is now trading back down in the $2,300s, resulting in an overall loss for the day.

The upbeat tone of market sentiment during Friday likely contributed to the decline in Gold prices. Typically considered a safe-haven asset, Gold tends to perform better during periods of crisis. However, with the overall positive sentiment prevailing, fueled by a rally in US stocks, such as the S&P 500 Index rising by 0.92% to 5,110 at the time of press, investors seemed less inclined towards safe-haven assets like Gold.


Gold prices experienced a notable surge on Friday in response to the release of the US Nonfarm Payrolls (NFP) report, which fell short of analysts’ expectations. The report revealed that only 175,000 new workers joined the employed ranks in April, below the anticipated 243,000 and the upwardly revised 315,000 from the previous month, according to data from the Bureau of Labor Statistics.

Additionally, Average Hourly Earnings softened, showing a year-on-year growth of 3.9% and a month-on-month increase of 0.2%, compared to estimates of 4.0% and 0.3%, respectively. This slight decline in earnings growth suggests a reduction in inflationary pressures, potentially increasing the likelihood of the Federal Reserve (Fed) cutting interest rates sooner than expected. Consequently, the expectation of lower interest rates weighed on the US Dollar (USD), causing the US Dollar Index (DXY) to fall by over half a percent post-release.

Further analysis of the NFP report revealed a decrease in Average Hours Worked from 34.4 to 34.3, likely indicating an increase in part-time work, which is generally interpreted negatively by economists. Despite this, the Unemployment Rate ticked down to 3.9% from the previous 3.8%, while the participation rate remained steady at 62.7%.

Additional data released on Friday included a deeper-than-expected decline in the US ISM Services PMI for April, dropping to 49.4 against a forecasted rise to 52.0 from the previous 51.4. The Services sector’s significance lies in its impact on interest rates, as it has been identified as a source of high wage inflation, potentially influencing monetary policy decisions to keep interest rates elevated.


On the 4-hour chart, Gold price (XAU/USD) has displayed a rebound after encountering a decline, halting its downward trajectory upon reaching the conservative target for completing its bearish Measured Move price pattern at the Fibonacci 0.681 price objective for wave C, situated at $2,286.

While the Measured Move pattern, characterized by a zig-zag structure, may still unfold further if wave C has more room to descend, it has fulfilled its conservative objective at the 0.681 Fibonacci target. However, there remains the possibility of it declining to a secondary target, where wave C equals the length of wave A. Alternatively, wave C might have concluded its unfolding entirely, leaving both scenarios viable.

In terms of directional movement, Gold finds itself in a transitional phase: a breach below the 0.681 Fibonacci target lows at $2,285 would necessitate confirmation of further downside movement, potentially targeting $2,245 (1.000 or where A=C).

Conversely, a breakout above the cluster of Moving Averages and the peak of wave B around $2,350 could signal the onset of a more bullish trend. Such a development might prompt a retest of the $2,400 highs.



Experienced Senior Research Analyst



Sikander Raza, a Senior Technical Analyst



Hamza Saleem, a Senior Business Analyst



Irsa Sajjad, as a Research Analyst for Equities

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