Gold (XAU/USD) was steady on Friday near $4,714, below the two-week high of $4,764 set on Thursday. Price action was muted as markets assessed US jobs data and developments in the Middle East.
US Nonfarm Payrolls rose by 115K in April versus 62K expected, and slowed from March’s 185K (revised from 178K). The Unemployment Rate held at 4.3% as forecast.
Wage Growth Update
Average Hourly Earnings rose 0.2% month-on-month versus 0.3% expected, and matched the prior reading. Annual wage growth rose to 3.6% from 3.4%, below the 3.8% forecast.
Gold was set for its first weekly gain in three weeks, supported by a weaker US Dollar and lower Oil prices. Reports also cited renewed exchanges of fire near the Strait of Hormuz, which carries nearly 20% of global Oil flows.
Oil prices stayed elevated due to supply disruption risks, keeping inflation in focus and supporting expectations of higher-for-longer interest rates. Chicago Fed President Austan Goolsbee said the jobs report looked “fairly steady” and that inflation “remains high and is moving in the wrong direction”.
Technically, gold tested the 20-day SMA near $4,695, with RSI near 52 and ADX around 20. Resistance sat near $4,882 and $5,000, while support was seen at $4,695, $4,509, and $4,350.
May 2025 In Review
Looking back at the situation in May of 2025, we saw gold testing key levels around $4,700, driven by a mixed jobs report and geopolitical jitters. The concerns at the time were whether gold could overcome resistance near $5,000 amid a “higher for longer” interest rate environment. Since then, gold successfully broke through that psychological barrier in late 2025 and is now trading around $5,250.
The Federal Reserve’s stance, which was a major headwind last year, has shifted significantly. We endured the “higher for longer” period through most of 2025, but with core PCE inflation finally cooling to 2.8% this quarter, the Fed initiated its cutting cycle with a 25-basis-point reduction in March 2026. This pivot away from the hawkish tone we saw last year provides a strong tailwind for non-yielding gold.
The labor market weakness from April 2025, with that low 115K payroll print, proved to be temporary. The US economy has since shown resilience, with the most recent Nonfarm Payrolls for April 2026 coming in at a solid 180,000, and the unemployment rate holding steady at 4.5%. This suggests a soft landing, allowing the Fed to continue its gradual rate cuts without panic.
The geopolitical tensions with Iran mentioned last year never fully resolved, and that underlying uncertainty continues to provide a floor for gold prices. The Strait of Hormuz remains a point of friction, keeping WTI crude oil prices elevated around $85 a barrel, which helps maintain gold’s appeal as an inflation hedge. We should not expect this background risk premium to disappear from the market anytime soon.
Given this backdrop of initial rate cuts and persistent geopolitical risk, we believe traders should consider long-dated call options to capitalize on further upside. Buying September 2026 calls with a strike price around $5,400 offers exposure to a continued rally as the Fed is expected to cut rates at least once more this year. This strategy allows for significant potential gains while defining the maximum risk to the premium paid.
To hedge against any unexpected hawkish pivot from the Fed, a cautious approach would be to use collar strategies or purchase put options. For instance, buying puts with a strike near the $5,000 level would protect positions against a sharp pullback if upcoming inflation data surprises to the upside. This provides a safety net should the market’s current dovish expectations prove to be overly optimistic.
