Gold struggles near $3,300 as strong US Dollar cap upside, NFP in focus

• Gold is holding steady near $3,300 as markets stay cautious ahead of the US Nonfarm Payrolls (NFP) report.
• The US Dollar stays resilient following the Fed's hawkish hold and firm macroeconomic data.
• US President Donald Trump's sweeping tariff executive order renews trade tensions, limiting Gold's downside.

Gold (XAU/USD) is treading water on Friday, hovering near $3,300 during the European trading hours as a resilient US Dollar (USD) caps gains in the precious metal. The Federal Reserve's (Fed) decision to keep interest rates unchanged in its July monetary policy meeting, while signaling a data-dependent hawkish stance for future action, has led markets to scale back bets on a September rate cut.

The reduced probability of near-term interest rate cuts underpinned by a string of upbeat US economic data, such as resilient Gross Domestic Product (GDP) growth, sticky inflation and a solid labor market, is driving the US Dollar up and pressuring non-yielding assets like Gold. Market focus now shifts to the high-impact Nonfarm Payrolls (NFP) report, due this Friday at 12:30 GMT, which could further shape interest rate expectations and drive fresh momentum in Gold prices.

Gold rebounded sharply on Thursday after hitting a one-month low on Wednesday, but couldn't hold those gains overnight with sellers pushing the price below $3,300, as sustained strength in the US Dollar dented sentiment, driving prices back below this psychological level. A strong Greenback raises the opportunity cost of holding non-yielding assets. While price action remains confined within a familiar range on Friday, reflecting market indecision ahead of the NFP report, ongoing US tariff tensions are offering some support and helping to limit downside pressure.

Market movers: Markets eye NFP after Trump's tariff shock and solid US data

• On Thursday, US President Donald Trump signed a sweeping executive order imposing new reciprocal tariffs ranging from 10% to 41% on imports from nearly 70 countries. Among the hardest hit countries are India, Canada, Switzerland, Taiwan and Brazil. The move escalates global trade tensions and threatens to disrupt supply chains at a time when inflation concerns are reemerging. While the initial deadline was set for August 1, the executive order states that the new tariffs will generally take effect from August 7.
• The Trump administration has introduced a universal 10% tariff on imports from countries where it runs a trade surplus, and a 15% minimum rate for roughly 40 nations with which it holds a trade deficit.
• Tariff uncertainty lingers for two of the US key trading partners as China and Mexico are still locked in unresolved negotiations. China's temporary tariff relief is set to expire on August 12, after which duties could rise to 15% or more if no agreement is reached. Meanwhile, Mexico has secured a 90-day extension, maintaining its current tariff regime for now but leaving the door open to steeper hikes later this year.
• The yield on the 10-year US Treasury held around 4.39%, while the 30-year yield hovered near 4.93% on Friday, as investors turned cautious ahead of the July Nonfarm Payrolls report. Higher bond yields raise the opportunity cost of holding non-yielding assets like Gold, adding to bearish pressure and helping keep XAU/USD pinned near a one-month low.
• The US economy grew at a 3.0% annualized rate in the second quarter, marking a strong rebound from the prior quarter's contraction. Core Personal Consumption Expenditure (PCE) inflation, the Fed's preferred measure, held steady at 2.8% YoY in June, slightly above expectations of 2.7. Meanwhile, private payrolls rose by 104,000 in July, recovering from a decline in the previous month and signaling continued strength in the labor market.
• Markets reacted swiftly, according to the CME Fedwatch tool, the probability of a September interest rate cut by the Fed fell to around 39%, down sharply from 65%. Meanwhile, odds for a 25 basis point cut in October stand near 47% as persistent inflation reinforces the central bank's "wait-and-see" approach.
• Alongside the July NFP report, which is expected to show a gain of 110K jobs, down from 147K in June, the US economic docket on Friday will feature several high-impact indicators. These include Average Hourly Earnings, the Unemployment Rate, the ISM Manufacturing Purchasing Managers Index (PMI) and the Michigan Consumer Sentiment Index.

Technical analysis: XAU/USD stalls near $3,300 as market awaits NFP

On the daily chart, XAU/USD is trading sideways around the $3,300 mark after dropping to a one-month low on Wednesday. Since then, price action has been consolidating in a narrow range, showing no clear directional bias.

The $3,270-$3,250 zone marks the first key support, aligned with the 100-day Exponential Moving Average (EMA) and a prior demand area. A decisive break below this level could open the door toward deeper support near $3,150. On the upside, immediate resistance stands at $3,350, which coincides with the middle Bollinger Band.

Momentum indicators paint a cautious picture. The Relative Strength Index (RSI) sits at 44, reflecting bearish sentiment while pointing to the neutral line. The Average Directional Index (ADX) remains extremely low at 11.76, indicating a lack of trend strength and overall market indecision.

Gold may continue to consolidate in its current trading range unless the July NFP report sparks a strong market reaction.