Gold price stalls after US jobs data fails to lift momentum

When an asset cannot rise on positive news, it often signals trouble in the market, analysts say.

The weaker-than-expected US employment report from Friday should have provided a favourable backdrop for gold, at least in principle. September non-farm payrolls increased by only 29k, far short of the roughly 90k forecast, and the jobless rate edged up to 4.2%.

That was sufficient to reduce anticipation of a further Federal Reserve rate increase this month, yet gold has been unable to convert the development into any meaningful gains.

The primary issue for the metal currently is that the bond market is not cooperating. The yield on 10-year Treasuries dipped briefly to around 5.16% after the jobs numbers before rebounding, and it remains elevated close to multi-decade highs of approximately 5.26% on the day.

That continues to weigh on a non-interest-bearing asset such as gold, keeping the opportunity cost of owning it uncomfortably high even as the Fed's stance becomes somewhat less aggressive. Technical indicators are also beginning to show the strain.

Gold is being pushed back to just below $4,140, not far above the late September lows in the $4,115-20 range. That zone also aligns with the 78.6% Fibonacci retracement of the July-to-August rally, estimated at $4,117. The price action and the area above suggest buyers are approaching a significant test.

A drop below that level would further undermine the recovery structure and bring the $4,000 psychological mark back into sharp focus.

For now, however, as long as the $4,115-20 region holds, the downside break is not yet confirmed.

The short-term chart is also not aiding buyers. Gold has fallen back below its 100-hour moving average at roughly $4,163, after recent recoveries repeatedly failed to gain traction above that line.

The pattern of lower highs continues to keep sellers in charge, while the 200-hour moving average near $4,215 adds another resistance level above.

Thus, despite the weak jobs report on Friday, the bond market has essentially halted gold's advance. Unless yields begin to drop more decisively, the technical picture suggests that the late-September lows will likely be tested before buyers can seriously consider rebuilding any upward momentum.