Gold price ticks higher ahead of US Nonfarm Payrolls report – FXStreet

• Gold prices have rebounded and risen ahead of November's US NFP data, which will influence market expectations for the Fed's interest rate path.
• Traders are leaning toward the Fed cutting interest rates by 25 basis points on Dec. 18.
• Violations of ceasefire terms between Israel and Hezbollah have reignited tensions in the Middle East, providing further support for Gold.

Gold prices (XAU/USD) recover from intraday losses ahead of the November United States (US) non-farm payrolls (NFP) data, a key release that provides further clues about the direction of the US. It rose to around $2,640 during European trading on Friday. Interest rates may be heading.

U.S. labor market data will be updated at the Dec. 18 policy meeting as the Federal Reserve begins lowering its key borrowing rate in September and officials become more focused on maintaining labor demand. The impact on the Federal Reserve's expected interest rate decisions will be significant. . Data will be published at 13:30 pm Japan time.

According to CME's FedWatch tool, there is a 72% chance that the Fed will cut interest rates by 25 basis points (bp) this month to 4.25% to 4.50%, with the remainder supporting keeping rates unchanged.

Lower interest rates are good for gold because they reduce the opportunity cost of holding non-interest bearing assets.

Economists expect the U.S. economy to add 200,000 new workers, significantly more than the 12,000 in October. Last month's NFP report said payroll employment estimates for some industries were affected by the hurricane. The unemployment rate is estimated to have increased from 4.1% to 4.2%.

Investors will also pay close attention to U.S. average hourly wage data to understand the current state of wage growth. The measures are estimated to have increased by 3.9% year-on-year, slower than the 4% increase in October.

Ahead of the US NFP data, the US dollar index (DXY), which tracks the value of the greenback against six major currencies, holds important support at 105.70. Meanwhile, the 10-year US Treasury yield rose to nearly 4.19%.

Gold prices remain strong due to renewed tensions in the Middle East

• Gold prices are expected to face increased volatility as traders prepare for official US labor market data. However, rising geopolitical tensions will continue to support gold prices.
• A regional ceasefire agreement between Israel and Hezbollah appears to be on the rocks as tensions flare up again, with each party accusing the other of violating ceasefire terms. The Israeli military carried out a series of airstrikes against Hezbollah late Monday in retaliation for two projectile attacks on Israeli military positions near Lebanon.
• Meanwhile, the war between Russia and Ukraine also keeps broader risk appetites on alert. Russian Foreign Minister Sergei Lavrov warns in an interview with US journalist Tucker Carlson that Russia is ready to use any means necessary to prevent the West from achieving its goal of inflicting a “strategic defeat” on Russia. The Print reported that.
• Rising geopolitical tensions and global uncertainty are increasing the appeal of safe-haven assets such as gold.

Technical analysis: Gold price moves near the 20-day EMA

Gold prices have been bouncing back and forth around an upward trendline near $2,650 plotted from the February low of $1,984.00 on the daily time frame. The precious metal is fluctuating around its 20-day exponential moving average (EMA), which is also trading near $2,650.

The 14-day Relative Strength Index (RSI) is hovering in the 40.00-60.00 range, very close to the neutral level of 50, suggesting a sideways trend.

Looking down, the November low near $2,537 will provide important support for gold price bulls. On the upside, the main resistance will be October's all-time high of $2,790.