Following a spectacular recovery surge from the US Dollar Index (DXY) on Thursday, GOLD prices plummeted to almost $1,912.00. Before the United States Nonfarm Payrolls (NFP) statistics, the precious metal tested the round-level resistance of $1,900.

The USD Index has resisted the downward pressure caused by rising expectations that the Federal Reserve (Fed) will consider a pause in policy tightening due to significant softening in US inflation. Still strong, the US labor cost index can potentially demolish the Fed policy pause scenario.

A 220K increase in payroll and a slight rise in the unemployment rate to 3.6% are what analysts at TD Securities anticipate for the US NFP report. The consensus forecast for annual average hourly earnings is 4.9%, up from the previous release’s 4.6%. However, 0.3% is anticipated to remain constant in the monthly reports. Increased bargaining power on the part of job seekers in response to a labor market surplus could put a dent in the price index’s downward trend. Still, the Federal Reserve does not need to slow the pace of its policy tightening to ignore the rumors.

While the Fed tightens monetary policy, risk-perceived assets like the S&P 500 have shown a three-day winning run.

Gold Technical Outlook

After failing to break above $1,950, the GOLD price fell sharply as it tried to break through the bullish channel’s support line in preparation for a possible bearish correction in the near future. Note that a daily close below $1,920 shows that the bearish trend is still going strong, while a daily close above it shows that the main bullish trend is back on track.