Gold Price Forecast: XAU/USD rally loses steam and approaches $3,340 support area

• Gold trims gains as the Dollar picks up ahead of the US NFP reading.
• US economy is expected to have created 130,000 jobs in May.
• XAU/USD shows a bearish divergence, which points to a weaker bullish momentum.

Gold (XAU/USD) is practically flat on Friday, trapped within the last few days' trading range. The broader trend remains positive, but the failure to breach resistance at the $3.400 area this week has shifted the focus towards the $3,440 support area.

The precious metal is struggling to extend gains on Friday, as the US Dollar pares some losses with investors cautious of betting against the Greenback ahead of the all-important US Non Farm Payrolls report, due later today.

US payrolls are expected to have increased by 130,000 in May, following a 177.000 nincrease in April. Markets, however, are wondering if these numbers are not too optimistic, in light of the grim ADP Employment and PMI figures released earlier this week.

XAU/USD Technical Analysis: Bullish momentum is losing steam

Technical indicators show prices moving within an ascending channel but with upside momentum losing steam. A bearish divergence in the 4-Hour chart and a potential Head & Shoulders pattern point to the possibility of a bearish correction.

Price action is now standing at the $3,440 area, which is the neckline off the mentioned H&S figure and the bottom of the ascending channel from mid-May lows..

On the downside, immediate support is at the $3,285 area and $3,345. Below here, the H&S measured target is $3,290. On the upside, a break of the mentioned $3,400 resistance cancels this view and clears the way towards the May 6 high, at $3440.

XAU/USD 4-Hour Chart