Cautious Positioning Ahead of NFP; Sustained Hold Above $4,100 Could Open the Door to Further Upside

Summary:

Gold continues to rebound as the U.S. dollar eases modestly, although expectations for further Federal Reserve rate hikes continue to cap gains. Markets are now awaiting the U.S. Nonfarm Payrolls report for fresh policy signals. A weaker-than-expected employment report could provide further upside momentum for gold, while stronger-than-expected data may put renewed pressure on prices.

BUY XAUUSD

EXP

TRADING

4118.51

Entry Price

4590.00

3785.00

4175.26 +52.14 +1.26%

0.0

Pips

Flat

3785.00

Exit Price

4118.51

Entry Price

4590.00

Fundamentals

Gold climbed to an intraday high during Thursday's European session, supported by a modest pullback in the U.S. dollar. However, expectations that the Federal Reserve will continue tightening monetary policy this year, combined with ongoing geopolitical risks that continue to underpin safe-haven demand for the dollar, have kept bullion confined within the previous session's trading range, limiting the strength of the breakout.

Ahead of the release of the June U.S. Nonfarm Payrolls report, investors have generally adopted a cautious stance, refraining from making aggressive directional bets. The employment data will not only shape expectations for the resilience of the U.S. economy but also play a key role in determining the Fed's next policy move.

According to the CME FedWatch Tool, markets currently assign roughly a 64% probability to a September rate hike, while the probability of at least one additional hike before year-end is approaching 85%. Meanwhile, Fed Chair Christopher Waller reiterated on Wednesday that the central bank remains firmly committed to restoring inflation to its 2% target, reinforcing expectations that interest rates are likely to stay higher for longer.

Despite the near-term policy headwinds, the medium- to long-term outlook for gold remains constructive. As the U.S. fiscal deficit continues to widen and government debt keeps climbing, gold's role as a hedge against monetary debasement and sovereign credit risk is expected to become increasingly important. At the same time, robust central bank purchases and resilient physical demand continue to support the market, while global allocations to gold ETFs and mutual funds remain below their long-term target ranges, suggesting there is still considerable room for additional institutional inflows.

We believe that even if the Federal Reserve maintains a relatively hawkish stance, it is unlikely to alter gold's structural bull market in the post-pandemic era. Gold prices are expected to advance toward the $4,700–$5,500 range over the next six to nine months, with $5,000 remaining an achievable target by early 2027.

Cautious Positioning Ahead of NFP; Sustained Hold Above $4,100 Could Open the Door to Further Upside_1

Technical Analysis

Gold staged a decisive breakout above the $4,100 psychological level on Wednesday, successfully clearing the upper boundary of its recent consolidation range and significantly improving the near-term technical outlook.

The $4,100 area has now shifted from resistance to a key support level. If prices can remain firmly above this level over the coming sessions, the breakout would be confirmed, likely reactivating the medium-term bullish trend.

On the upside, immediate resistance is seen around $4,115. A sustained break above this level could pave the way for advances toward $4,222 and $4,384. On the downside, initial support is located at $4,029, followed by $3,994. A move back below $4,100 and into the previous consolidation range would signal a failed breakout and increase the risk of a deeper pullback.

Trading Recommendation

Direction: Buy

Entry: 3879

Target: 4590

Stop Loss: 3785

Valid Until: 2026-07-31 23:55

Support: 4029, 3994, 3943

Resistance: 4115, 4222, 4384

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