Bumper NFP boosts Fed rate rise bets as gold plunges below $4,100

• After reaching $4,106, Gold retreats nearly 1% to $4,060.
• US payroll growth reaches 165K against expectations of 65K, while unemployment declines to 4.1%.
• The probability of a December Fed rate rise climbs to 77%, while the US Dollar moves back above 102.00.

A much stronger-than-forecast US employment report raised the likelihood that the Federal Reserve (Fed) could lift interest rates at its December meeting, leaving Gold nearly 1% lower on Friday after a peak of $4,106. At the time of writing, XAU/USD stands at $4,060.

XAU/USD turns lower after robust US jobs figures as attention shifts to next week’s US CPI

October Nonfarm Payrolls (NFP) rose by 165K, comfortably exceeding the 65K forecast, while the previous month’s figure was revised higher from 29K to 60K. With employers adding positions across a wide range of sectors, the unemployment rate consequently eased to 4.1% from 4.2%. Sentiment remains upbeat, with investors buying the dip in US equities.

Alongside the employment figures, an encouraging US Consumer Sentiment report from the University of Michigan points to continued economic resilience despite swings in energy prices. The Consumer Sentiment Index increased modestly to 51 in November from October’s 48, while one-year inflation expectations eased to 4.3% from 4.7%.

Following the NFP release, the US Dollar Index (DXY) regained the 102.00 mark and is trading above that level, up 0.62%. The index measures the dollar’s performance against a basket of six currencies.

According to the CME FedWatch Tool, the probability of a Federal Reserve (Fed) rate rise at the December meeting increased to 77% from 67% on Thursday as investors strengthened their hawkish bets.

Inflation expectations remain anchored, according to St. Louis Fed President Alberto Musalem, who attributed the current excess inflation to energy shocks and the AI buildout. He also said that “people remain concerned about inflation at the current level,”.

US Treasury yields nevertheless eased from their intraday peaks, with the 10-year T-note yield standing at 4.840%, up 0.1%.

Meanwhile, newswires reported the possibility of an agreement as negotiations between the US and Iran continued. The Houthis, however, maintained their attack on Saudi Arabia.

Reports suggest that Tehran is preparing for a potential escalation even as talks continue. Citing Israeli press reports, Al Arabiya said that “America is planning an intensive and rapid operation against Iran to reach a nuclear agreement on better terms.”

Gold traders are also looking ahead to next week’s US inflation releases, jobless claims and remarks from Fed officials.

XAU/USD technical outlook: Gold pulls back as $4,100 proves difficult to hold

Since reaching Thursday’s weekly high of $4,146, Gold has slipped back below $4,100. The direction for XAU/USD remains uncertain, although the bias leans lower. A reversal in the Relative Strength Index (RSI) near its neutral level signals that momentum has turned bearish. With next week’s US inflation figures approaching, the precious metal is therefore expected to finish the week around familiar territory, within the $4,050-$4,150 range.

To extend its advance, the non-yielding metal needs to overcome the confluence of its 100-day and 50-day Simple Moving Averages (SMAs), which stand at $4,197 and $4,202, respectively. Clearing these would pave the way for a test of $4,300.

Sellers would need a break below 4,000 to regain control of Gold. Such a move could intensify the downtrend, bringing the November 4 daily low of $3,919 into focus as the next key support, ahead of the October 30 year-to-date low of $3,879.