After a robust U.S. jobs report eased pressure on the Federal Reserve, gold fell.

The U.S. 10-year Treasury yield climbed to 3.971%, while the U.S. Dollar Index touched an August mid-month high of 102.58, capping gains in gold.

Geopolitical risks involving Israel and Iran, which support gold, may push gold to touch $2,700.

The U.S. jobs report was stronger than expected, suggesting the labor market remains robust, and the Federal Reserve (Fed) may ease policy in increments of 25 basis points (bps), after which gold prices fell. At the time of writing, gold/dollar was trading at $2,643, down 0.40%.

The U.S. Bureau of Labor Statistics (BLS) revealed that the labor market is far from being in a dire situation following an excellent September jobs report. The data eased pressure on the Federal Reserve, which lowered borrowing costs by 0.50% at the September meeting due to concerns about achieving the U.S. central bank's maximum employment mandate.

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The unemployment rate fell by two-tenths, while average hourly earnings were mixed, with a monthly reading decline and an increase over the 12 months ending in September.

Traders reacted to the data, pushing the U.S. 10-year Treasury yield up by 12 basis points to 3.971%, the highest level since mid-August 2024. This was one of the reasons limiting gold prices. The U.S. Dollar Index (DXY), which tracks the value of the dollar against a basket of six currencies, also touched its highest level since mid-August at 102.58, up 0.63%.

The data locked in a 25 basis point rate cut by the U.S. central bank at the upcoming November meeting. In fact, only a very small proportion of investors expected the Federal Reserve to keep interest rates unchanged.

Next week, the U.S. will release inflation data, unemployment claims, and the University of Michigan consumer sentiment index.Daily Summary Market Movers: US Economic Recession Fears Fade, Gold Prices Fall

The US non-farm payrolls increased by 254K in September, surpassing the estimated 140K and the revised August figure of 159K. The unemployment rate dropped from 4.2% to 4.1%, lower than anticipated.

The average hourly earnings grew by 0.4% month-on-month in September, lower than the previous month's 0.5%, but higher than the expected 0.3%.

In the 12 months through September, hourly earnings increased by 4%, higher than the expected and August figures, which were 3.8% and 3.9%, respectively.

Market participants ignored the proposal for a 50 basis points rate cut by the Federal Reserve. According to the CME FedWatch Tool, there is a 95% chance of a 25 basis points rate cut, while there is a 5% possibility of maintaining the interest rate unchanged.

XAU/USD Technical Analysis: Gold Price Breaks Below $2650, Key Technical Levels Expected Below $2600

Gold prices have been consolidating near $2640-2670 for five consecutive days after the Relative Strength Index (RSI) exited the overbought territory. The price action remains range-bound, with buyers losing momentum, opening the door for a pullback.

If the daily closing price of XAU/USD falls below $2650, look for a drop towards the September 18th high turned support level at $2600. Once breached, the next demand area will be the 55-day simple moving average (MA) between $2550 and $2524.

Conversely, for a bullish continuation, XAU/USD needs to break through $2666-2676 to have a chance to challenge the year-to-date high of $2685. Next up would be the $2700-2710 threshold.