- Gold soared higher at the start of the US session on Friday.
- The 10-year US Treasury yield wiped out all its daily gains after the lousy jobs report.
- Initial resistance lines up at $ 1,780 before $ 1,787.
After spending most of the day near $ 1,760, the pair XAU/USD It gained bullish momentum early in the US session and was last seen trading at its highest level since Sept. 22 at $ 1,778, rising 1.3% on the day.
Following the disappointing August employment report, data released by the US Bureau of Labor Statistics on Friday showed that the job market struggled to recover in September. Nonfarm payrolls (NFP) increased by 194,000 and fell short of the market expectation of 500,000 by a wide margin.
Although the underlying details of the release showed that August printing was revised up to 366,000 from 235,000 and the Unemployment Rate declined to 4.8%, the dollar struggled to remain resilient against its rivals.
In addition to renewed USD weakness, the sharp U-turn seen in US Treasury yields also gave XAU / USD a boost. The benchmark 10-year US Treasury yield, which advanced to its strongest level since early June at 1.6% earlier in the day, is currently unchanged at 1,573%.
Commenting on the NFP data, “The risk for the Fed to change its mind is high,” noted FXStreet analyst Yohay Elam. “Despite the high chances that the bank will print fewer dollars, there is room for the dollar to fall in the short term.”
Gold technical outlook
On the four-hour chart, the Relative Strength Index (RSI) indicator is closing in the overbought territory, suggesting that the pair could have a hard time pushing higher before making a technical correction. The former static resistance of $ 1,770 now lines up as the first technical support. In case XAU / USD sustains above that level, it will need to clear the 200-period SMA at $ 1,780 before targeting $ 1,787 (September 22 high).
On the other hand, a daily close below $ 1,770 could attract sellers. Below that level, $ 1,755 (100-period SMA) could be seen as the next support before $ 1,745 (static level).