Gold drifts lower as rebounding bond yields and Fed hike bets support USD ahead of US NFP

Gold prices experienced a decline on Friday as bond yields rebounded and bets on a Federal Reserve interest rate hike strengthened the US Dollar ahead of the crucial US Nonfarm Payrolls (NFP) report. The precious metal's slide pushed it below the $4,100 mark during the Asian session, extending a recent two-week high retracement.

US bond yields showed a slight recovery following a two-month low, bolstering the US Dollar and adding pressure to gold. However, traders are cautious about aggressive bets ahead of the NFP release, which is expected to show a stronger-than-anticipated 65,000 new jobs added in October. Investors will also closely monitor Average Hourly Earnings, as wage growth could impact Federal Reserve policy expectations.

While macroeconomic indicators are expected to create volatility in the markets, driving demand for the US Dollar, concerns over AI development in the US and geopolitical tensions between the US and Iran added support for the safe-haven Dollar. Gold showed signs of recovery, breaking above the $4,000 psychological barrier, and holding near $4,047.

Technical indicators suggest potential follow-through selling below the 38.2% Fibonacci retracement level at $4,039, with a break below this level exposing the 50.0% retracement near $4,006. The US Dollar remained the strongest against the New Zealand Dollar, while USD/JPY rebounded from a weekly low due to expectations of a hawkish Bank of Japan and intervention risks supporting the Japanese Yen.