By Gold’s Recent Performance
Gold experienced an exceptional rally between November 2022 and January 2026, more than tripling in value during that period. However, on 30 January 2026, XAUUSD recorded its steepest daily fall since 1983, raising questions about whether the multi-year bull run had reached exhaustion. The selloff initially reflected profit-taking after a long upward move. It then accelerated after U.S. President Donald Trump announced Kevin Warsh as his preferred choice for the next Federal Reserve chair. Warsh’s reputation as an inflation hawk led investors to reassess expectations for future monetary policy, reducing confidence in a rapid return to a dovish Fed. Higher margin requirements at CME Group also compounded the pressure, adding to the speed and severity of the move.Why Gold Has Struggled Despite Geopolitical Risk
Since the outbreak of the U.S.-Iran conflict, gold has continued to trade under pressure. That has surprised many traders because gold usually performs well during periods of geopolitical instability. Elev8 argues that the reason is relatively straightforward: the conflict in the Persian Gulf has pushed energy prices higher, reignited inflation fears, and changed monetary policy expectations across the G7 from dovish to hawkish. “Before the conflict, the market theme for 2026 was a pivot toward lower interest rates, but the war has effectively paused that narrative,” said Kar Yong Ang, financial market expert at Elev8 broker. Central banks face a difficult constraint. They cannot easily cut rates while energy-driven inflation remains unanchored. According to Elev8, the Federal Reserve is now expected to keep interest rates unchanged at least until January 2027, while other major central banks may consider rate hikes as early as June. That synchronized hawkishness creates a difficult environment for gold, which typically benefits from lower real yields, weaker currencies, and expectations of easier monetary policy.Trader Takeaway
Gold is not reacting to geopolitical risk in isolation. Energy-driven inflation and hawkish central bank expectations are currently more important drivers for XAUUSD.
How Important Is the NFP This Time?
The Nonfarm Payrolls report is historically one of the most influential economic releases for financial markets. It can move currencies, bonds, equities, commodities, and gold by changing expectations for Federal Reserve policy. This time, however, Elev8 says the impact may be more limited than usual. The global investment community is currently focused on the Persian Gulf conflict, inflation risk, and uncertainty around Kevin Warsh’s likely policy stance. These broader drivers may overshadow one labour market report unless the data delivers a major surprise. Recent U.S. labour data has also been mixed. Job openings increased significantly in April, but the hiring rate declined amid uncertainty linked to the Iran conflict. Resignations fell to the lowest level in nearly six years, suggesting workers are less confident about switching jobs. Economists continue to describe the labour market as “slow-hire, slow-fire.”NFP Expectations and Gold Scenarios
The market expects the upcoming report to show a moderate 86,000 rise in payrolls, an unemployment rate of 4.3%, and average hourly earnings slowing to 3.4% year-on-year. A stronger-than-expected labour market print would likely reinforce the “higher for longer” interest rate narrative already priced into currencies and commodities. In that scenario, XAUUSD could lose the structural support area near 4,400, opening the way toward 4,310 and then 4,220. For CFD traders, that kind of downside move would make risk controls especially important. Elev8 notes that traders may consider tightening stop-loss levels or reducing leverage ahead of the release, particularly if volatility increases around the data.Bearish Gold Scenario
| Trigger | Stronger-than-expected NFP, steady unemployment, resilient wage growth |
| Market interpretation | Higher-for-longer Fed policy remains intact |
| XAUUSD risk | Break below 4,400 support |
| Next levels | 4,310, then 4,220 |
What Would Make Gold Rally?
For gold to rally meaningfully, Elev8 says the NFP report would need to miss expectations substantially. A negative payroll surprise, such as an outright drop in employment, could push XAUUSD above 4,600 and toward the next resistance zones at 4,680 and 4,770. However, a sustained rally would require more than one weak jobs report. Monetary policy expectations would need to turn less hawkish, and that would likely depend on inflation cooling. In the current environment, cooling inflation depends heavily on political normalization in the Persian Gulf and lower energy-price pressure.Bullish Gold Scenario
| Trigger | Major NFP downside surprise or negative payroll growth |
| Market interpretation | Fed policy expectations may soften |
| XAUUSD upside trigger | Move above 4,600 |
| Next resistance levels | 4,680, then 4,770 |
Trader Takeaway
A weak NFP could trigger a short-term gold rebound, but a durable bullish reversal would likely require softer inflation and a less hawkish monetary policy outlook.