Gold rose about 0.75% on Friday, trading near $4,711 after a low of $4,673. Markets focused on prospects of a Middle East ceasefire that could lower oil prices and ease inflation pressure.
Tensions still persisted as Iran delayed a response to a US 14-point proposal, while exchanges of fire were reported in the Persian Gulf and the UAE was attacked. West Texas Intermediate was set to end the week down more than 6%.
Dollar And Yields Support Gold
The US Dollar Index fell 0.33% to 97.93, while the US 10-year Treasury yield dropped two basis points to 4.362%. These moves supported gold despite firm US labour data.
US nonfarm payrolls rose by 115K in April versus a 62K estimate, and March was revised to 185K from 178K. Unemployment held at 4.3%, and average hourly earnings rose 3.6% against a 3.8% forecast.
University of Michigan consumer sentiment fell to a record low of 48.2 in May from 49.8 in April. One-year inflation expectations fell to 4.5% and five-year expectations to 3.4%, while markets did not price rate cuts in 2026.
Gold tested resistance around $4,700–$4,715, with further levels at $4,768, $4,781, $4,900 and $5,000, and support near $4,700 and $4,500. Next week’s focus includes US CPI, PPI, retail sales, and Federal Reserve speeches.
Trade Setup And Key Levels
Given the current market dynamics on May 9, 2026, we see gold pushing towards key resistance levels around $4,715. This rally is primarily fueled by a weaker US Dollar and falling Treasury yields, as hopes for peace in the Middle East drive oil prices down more than 6% this week. Derivative traders should note that gold is currently moving on geopolitical sentiment rather than strong underlying economic data.
However, we must be cautious as the market is largely ignoring a very strong April jobs report, which showed a gain of 115,000 jobs against an estimate of only 62,000. Historically, like when the US economy added a surprise 336,000 jobs in September 2023, such strong labor data eventually forces the Federal Reserve to maintain a hawkish stance. This creates a significant divergence that could snap back and hit gold prices if the market’s focus shifts back to the economy.
The main event for the coming weeks will be the release of US Consumer Price Index (CPI) and Producer Price Index (PPI) data. With the latest core CPI figure from March holding at an annualized 3.8%, any number that fails to show significant cooling could quickly reverse the dollar’s recent weakness. A hot inflation print would reinforce the view that no rate cuts are coming in 2026, putting immediate and strong pressure on gold.
Considering this major upcoming catalyst, traders should prepare for a spike in volatility. Buying options strategies like straddles or strangles could be a prudent way to trade the upcoming inflation report, allowing one to profit from a large price move in either direction. This approach helps manage risk in a market where the narrative of easing inflation is about to be tested by hard data.
For positioning, key levels to watch are the resistance at the 100-day moving average of $4,768 and the psychological target of $5,000. On the downside, a failure to hold $4,700 could see a quick slide back toward the weekly low of $4,500. Traders could consider buying call options with strikes above $4,750 and put options with strikes below $4,600 to capitalize on a breakout following the data releases.
