Gold price sits near daily high on weaker USD; focus remains glued to US NFP report

LONDON (May 2) Gold price (XAU/USD) touches a fresh daily high during the early part of the European session on Friday, though the intraday move-up lacks bullish conviction and remains below the $3,260-3,265 support breakpoint. The US Dollar (USD) struggles to capitalize on a three-day-old uptrend to a multi-week high and drifts lower amid prospects for more aggressive policy easing by the Federal Reserve (Fed). Apart from this, some repositioning trade ahead of the release of the US Nonfarm Payrolls (NFP) report acts as a tailwind for the non-yielding yellow metal.

Meanwhile, signs of easing trade tensions between the US and China – the world's two largest economies – and hopes for tariff deals between the US and its trading partners remain supportive of a positive risk tone. This remains supportive of a generally positive risk tone and might hold back traders from placing fresh bullish bets around the safe-haven Gold price. Hence, it will be prudent to wait for strong follow-through buying before confirming that the XAU/USD pair's recent pullback from the $3,500 psychological mark, or the all-time high, has run its course.

Daily Digest Market Movers: Gold price bulls retain intraday control amid modest USD weakness, ahead of US NFP

• China's Commerce Ministry said on Friday that the US has recently, through relevant channels, actively conveyed messages to engage in talks on tariff issues and the country is assessing the proposal to start negotiations. This adds to the optimism over a possible easing of the tit-for-tat tariff war between the world’s two largest economies.
• Moreover, hopes for tariff deals between the US and its trading partners lifted the US Dollar to a three-week high and dragged the Gold price to the $3,200 neighborhood on Thursday. The USD bulls, however, turn cautious amid bets for more aggressive policy easing by the Federal Reserve and ahead of the US Nonfarm Payrolls report.
• Traders ramped up their bets that the US central bank will deliver four quarter-point rate reductions by the year-end after data released this week showed that the US economy unexpectedly contracted for the first time since 2022. Moreover, the Personal Consumption and Expenditure (PCE) Price Index pointed to signs of easing inflation.
• Adding to this, the US ADP report on private-sector employment suggested that the US labor market is cooling. Furthermore, the US Department of Labor reported on Thursday that initial jobless claims increased from 223,000 to 241,000 in the week ended April 26 – marking the highest level since February.
• Meanwhile, the US ISM Manufacturing PMI remained firmly in contraction territory for the second straight month, though it fell less than expected, from 49.0 to 48.7 in April. Traders now look forward to the release of the US monthly employment details for fresh cues about the Fed's policy outlook.
• The popularly known US Nonfarm Payrolls (NFP) report is expected to show that the economy added 130K new jobs in April, sharply lower than 228K in the previous month. The Unemployment Rate, however, is expected to hold steady at 4.2%, while Average Hourly Earnings might have risen by 0.3%.

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