Gold (XAU/USD) held steady on Friday but lacked upside momentum as investors digest mixed U.S. employment data while closely monitoring geopolitical developments in the Middle East. At the time of writing, XAU/USD is trading around $4,714, hovering below the two-week high of $4,764 reached on Thursday.
Data released by the U.S. Bureau of Labor Statistics (BLS) showed that nonfarm payrolls (NFP) rose by 115,000 in April, exceeding market expectations of 62,000, but slowed from March’s gain of 185,000. (corrected from 178 thousand). Meanwhile, the unemployment rate remained steady at 4.3%, in line with market expectations.
Average hourly earnings increased by 0.2% m/m in April, missing expectations of 0.3% and matching the previous reading. Annual wage growth accelerated to 3.6% from 3.4%, although it remained below the forecast of 3.8%.
The metal remains on track for its first weekly gain in three weeks, drawing support from a weaker U.S. dollar (USD) and falling oil prices amid cautious optimism that the United States and Iran can reach a deal to end the war. However, tensions rose again on Thursday after the two sides reportedly exchanged fire near the Strait of Hormuz.
Despite the resumption of hostilities, US President Donald Trump downplayed the latest escalation. “The ceasefire is in place. It’s already in effect,” Trump told ABC News.
At the same time, Trump has retaliated by issuing recent warnings against Tehran, while Washington awaits Iran’s reaction to the latest US proposal. “We will knock them out much harder and much more brutally in the future if they don’t sign the contract, FAST!” Trump wrote on his Truth Social platform.
Although oil prices have recovered from recent highs, they remain elevated amid ongoing supply disruptions through the Strait of Hormuz, a key shipping lane that transports nearly 20% of global oil flows.
This continues to focus attention on inflation risks, limiting attempts to rally the unprofitable metal as markets increasingly expect major central banks, particularly the Federal Reserve (Fed), to keep interest rates higher for longer. The Chicago Fed president said Friday that the latest U.S. jobs report appears “fairly stable,” adding that inflation “remains high and heading in the wrong direction.”
Technical Analysis: XAU/USD Trades in Rising Bollinger Bands as Volatility Increases
On the daily chart, XAU/USD is testing the 20-day straightforward moving average (Middle Bollinger Band) near $4,695 while maintaining a constructive near-term stance, keeping the uptrend from recent lows intact as volatility bands continue to expand.
A Relative Strength Index near 52 suggests moderately positive momentum without overbought conditions, and a subdued Average Directional Index near 20 indicates a trend that is present but not strongly directional, leaving room for longer swings within a broader bullish structure.
Upside, immediate resistance appears at the upper Bollinger Band near $4,882, with a more strategic barrier at the psychological $5,000 level where sellers could attempt to reassert control.
On the other hand, initial support is located in the middle Bollinger band near $4,695, ahead of the lower band near $4,509; To seriously challenge the prevailing bullish sentiment, a deeper pullback towards the horizontal lower level at $4,350 would be necessary.
(The technical analysis for this story was written with the assist of an AI tool.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two missions: achieving price stability and promoting full employment. The basic tool for achieving these goals is adjusting interest rates. When prices rise too swift and inflation exceeds the Fed’s 2% target, the Fed raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US dollar (USD) because it makes the United States a more attractive place for international investors to park their money. When inflation falls below 2% or the unemployment rate becomes too high, the Fed may lower interest rates to encourage borrowing, which will negatively impact the dollar.
The Federal Reserve (Fed) holds eight policy meetings a year, during which the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. Twelve Fed officials attend the FOMC meeting – seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional reserve bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may exploit a policy called quantitative easing (QE). QE is the process by which the Fed significantly increases the flow of credit in the gridlocked financial system. This is an unusual policy measure used during crises or when inflation is extremely low. This was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more dollars and using them to buy high-quality bonds from financial institutions. QE tends to weaken the US dollar.
Quantitative Tightening (QT) is the reverse process of QE, in which the Federal Reserve stops purchasing bonds from financial institutions and does not reinvest capital from the bonds it holds at maturity to purchase recent bonds. This is usually positive for the value of the US dollar.
