Last Updated on October 3, 2026 by Deon
Gold prices struggled to maintain their recovery on Friday as XAU/USD failed to break above the $4,200 level. The metal rose to around $4,227 after the latest US employment report showed a weaker increase in jobs than expected.. Rising US Treasury yields later put pressure on gold and pushed the price back down to $4,138.
This price action shows the two forces at work in the gold market right now. A weak labor report can signal that the Federal Reserve may ease policy, which supports gold. At the time higher Treasury yields make gold less attractive because it does not pay interest.
Weak US Jobs Data Supports Gold
The US nonfarm payrolls rose by 29,000 in September far below the 90,000 estimate. August payrolls were also revised down to 133,000. The unemployment rate went up from 4.1% to 4.2%.
The weaker job numbers initially boosted gold. Softer labor conditions can lead to expectations of interest rates. This gave some support to gold. It also raised hopes that the Federal Reserve might keep interest rates steady at its October meeting.
The rally in gold was short-lived. XAU/USD reached $4,227 before sellers came in and pushed the price lower.
Treasury Yields Limit Golds Recovery
Higher US Treasury yields played a role in the pullback in gold prices. Gold does not generate income. So when bond yields rise investors may prefer assets that do pay interest. That increases the cost of holding gold.
According to the FXStreet report the US 10-year Treasury yield stayed high. Climbed by several basis points. This helped reduce the effect of the weak payrolls.
The link between gold and Treasury yields will stay important for traders watching XAU/USD.
$4,200 Remains Key Resistance
The $4,200 level has become a technical barrier for gold. Even though buyers managed to push XAU/USD that mark during the day the price could not hold it. The failure to stay above $4,200 shows that sellers are still active near this level.
For gold to show technical momentum buyers need to hold above $4,200 and keep prices there. The next major target for upside is the 100-day Simple Moving Average, which’s around $4,279 according to the FXStreet analysis. A sustained move above these levels could change the short-term trend.
$4,100 Becomes Important Support
On the downside $4,100 is the major support level to watch.
If the price breaks below $4,100 it could open the door to the July 29 low at around $3,996. Further weakness might then bring the July 17 near $3,959 into play.
These levels give traders a picture of where the market could go if the downtrend continues.
The reaction around $4,100 may be especially important in the coming trading sessions.
RSI Shows Weak Momentum
Momentum has also weakened. The Relative Strength Index is still below the 50 level. That shows selling pressure’s building.. The RSI should not be used alone to predict the next move. Price action yields, the US dollar and expectations for policy all affect XAU/USD.
The failure to maintain gains above $4,200 combined with a RSI makes the short-term outlook more vulnerable to further downside if support breaks.
Fed Expectations Remain in Focus
The latest employment report has changed how markets are thinking about the Federal Reserve.
Weak payroll growth and a higher unemployment rate have increased the chances of a rate hold in October. FXStreet said money markets were pricing in a likelihood of no change at the October 28 meeting. Expectations for the December meeting are also being closely watched.
For gold traders upcoming US economic data will remain very relevant. Markets will try to understand if the job market weakness is part of an economic slowdown or just a temporary dip.
What Traders Should Watch Next
Several factors could affect gold in the few sessions:
$4,200: Key resistance for XAU/USD.
$4,100: First major support level.
$3,996: Next support if $4,100 breaks.
$3,959: Downside target.
$4,279: 100-Day SMA and key technical level.
US Treasury yields: A driver for gold.
Fed expectations: Important for interest-rate pricing.
US economic data: Employment and activity indicators can impact XAU/USD.
Gold Price Outlook
Gold’s inability to stay above $4,200 shows that the market is still facing resistance despite the weak payroll data. Higher Treasury yields limited the reaction keeping XAU/USD below a major psychological level.
For now traders should focus on the $4,200 resistance and $4,100 support. A sustained break above $4,200 would bring $4,279 into view. A drop below $4,100 could expose levels near $3,996 and $3,959.
The direction of US yields and evolving expectations around Federal Reserve policy are likely to be central to gold trading in the days
