Gold slid nearly 1% on Friday, failing to hold above $4,200 even after a soft US Nonfarm Payrolls print. XAU/USD traded at $4,138 after an intraday high of $4,227, as US Treasury yields firmed and reduced the appeal of a non-yielding asset. September payrolls rose by 29K versus estimates of 90K and August’s downwardly revised 133K, while the unemployment rate ticked up to 4.2% from 4.1%, a move linked to higher participation. Money markets priced a hold at the 28 October meeting with odds near 77%, while December pricing implied an 88% probability of action; the US Dollar Index was down 0.14% at 101.89.
The benchmark 10-year yield stood at 5.9%, up 4 basis points, keeping pressure on bullion despite broad dollar softness. In energy, West Texas Intermediate fell 1.6% to $91.42 on reports Europe may release diesel and crude from reserves. Technically, RSI remained below 50, with support flagged at $4,100, then $3,996 and $3,959; reclaiming $4,200 would expose the 100-day SMA at $4,279. Central banks bought 1,136 tonnes of gold worth around $70 billion in 2022.
Short-Term Bearish Momentum Remains Likely
We believe derivative traders should prepare for short-term bearish momentum in gold after its clear failure to sustain levels above the crucial $4,200 mark. Despite a disappointing US jobs report showing only 29,000 payrolls added, the pressure from rising bond yields is currently too strong for bulls to overcome. With the US 10-year Treasury yield hovering at a high of 5.9%, the opportunity cost of holding non-yielding bullion remains a massive headwind.
For those trading options or generic contracts for difference, we recommend focusing on short positions targeting the immediate support level at $4,100. If selling pressure intensifies and pushes the price below this threshold, the next logical targets for downside plays lie near the $3,996 and $3,959 support zones. Historically, when gold fails to clear major psychological milestones, it often undergoes a 5% to 8% correction, which aligns perfectly with a slide toward these lower support areas.
Key Levels And Upcoming Catalysts To Watch
We must also closely monitor upcoming high-impact economic releases, including the ISM Services PMI and the FOMC meeting minutes. Since money markets are pricing in a 77% chance of a rate hold in October followed by an 88% chance of a December hike, any hawkish surprises will likely push yields even higher and accelerate gold’s decline. Traders using leverage should keep tight stop-losses just above the $4,200 resistance to protect against sudden safe-haven reversals.
