Last Updated on 05/10/2026
Fundamental Analysis
Gold futures remained directionless on Friday as markets continued to assess the renewed escalation of the US-Iran conflict, now in its 217th day. At the same time, softer-than-expected US employment data supported expectations that the Federal Reserve may keep interest rates unchanged at its upcoming policy meeting.
Spot gold edged 0.2% higher to $4,187.17 an ounce by 10:01 ET (14:01 GMT), while gold futures gained 0.3% to $4,215.82 an ounce. Despite Friday’s rebound, gold remained on track for a second consecutive weekly decline, with bullion down more than 2% so far this week.
“Gold is stabilizing after a challenging week, receiving some support as Treasury yields decline and the Fed adopts a more cautious stance on interest rates,” said Neil Welsh, Head of Metals at Britannia Global Markets.
Meanwhile, the US Dollar Index, which measures the greenback against a basket of major currencies, slipped 0.2% but remained close to the 17-month high reached during the previous session. The index was heading toward a weekly gain of approximately 1%, increasing the cost of gold for investors holding other currencies.
US Treasury yields also remained elevated. The 10-year Treasury yield briefly climbed to 5.344% on Thursday, its highest level since 2002, before retreating later in the session. On Friday, the benchmark yield stood at 5.234%.
Weak Jobs Data Shifts Fed Rate Expectations
Markets are now closely watching the September Nonfarm Payrolls report, which showed the US economy added just 29,000 jobs, well below expectations of 89,000 and August’s revised figure of 162,000. The unemployment rate also increased to 4.2%, compared with expectations for it to remain at 4.1%.
The disappointing employment figures have become an important factor in shaping expectations for the Federal Reserve’s two-day policy meeting scheduled for October 27–28.
Expectations for another rate increase have weakened considerably in recent days following softer-than-expected inflation data and comments from several Fed officials suggesting that there is limited urgency to raise rates again.
Following the jobs report, markets were pricing in an approximately 84% probability that the Fed would leave interest rates unchanged this month, up from around 76% a day earlier and 36% a week ago. Meanwhile, the probability of another rate hike dropped to roughly 16%, compared with about 64% one week earlier.
A reduced likelihood of further rate increases could provide support for gold by lowering the opportunity cost of holding the non-yielding precious metal.
The Fed raised interest rates by 25 basis points in September as policymakers sought to contain persistent inflationary pressures, which have been exacerbated by geopolitical tensions in the Middle East and heavy investment in artificial intelligence infrastructure.
However, signs of weakening conditions in the labor market could make policymakers more cautious about additional tightening. While higher interest rates can help contain inflation, they can also weigh on economic growth and employment.
Geopolitical Risks Continue to Support the US Dollar
Despite weaker employment data, escalating geopolitical tensions and energy-related inflation risks continue to provide support for the US dollar. With the possibility of an imminent resolution to the US-Iran conflict appearing increasingly remote, investors remain focused on developments in the Middle East.
Speaking on Thursday, US President Donald Trump said he was “ensuring that Iran will be very quickly ended,” while claiming that Iran’s leadership was “ready to fold up.” Trump also said he expected the US to win the conflict “right after the election,” if not before the US midterm elections.
The US military presence in the Middle East is also increasing. The USS Theodore Roosevelt Carrier Strike Group and the USS Makin Island Amphibious Group are reportedly heading toward the region. Their arrival could bring the number of US carrier strike groups in the Middle East to three, alongside approximately 20,000 US personnel.
Separately, the Saudi-led coalition fighting Yemen’s Iran-backed Houthis accused the group of attacking an electricity distribution station in Medina on Thursday. The alleged attack, which occurred in the Saudi city that is home to Islam’s second-holiest site, prompted condemnation from across the Muslim world.
Technical Levels to Watch
Gold Futures – Weekly Chart
On the weekly chart, gold futures opened at $4,315.00, reached a high of $4,315.60 and fell to a low of $4,143.10. The contract was trading around $4,165, indicating persistent selling pressure after retesting the double-top formation established during the final week of August.
The bearish trend could accelerate if the Federal Reserve delivers a 50-basis-point rate hike on October 28.
Even if the Fed decides to keep rates unchanged, gold futures could still revisit the psychological support level around $3,955 during October, particularly as heightened geopolitical tensions continue to create an increasingly uncertain economic environment.
Gold Futures – Daily Chart
On the daily chart, gold futures opened at $4,211.37, climbed to an intraday high of $4,256.50 and dropped to a low of $4,154.15. The contract was trading around $4,167.90, extending a sustained downward trend that began after gold futures reached $4,439.77 on September 18, 2026.
The continued decline highlights the strength of bearish pressure in the market.
A gap-down opening below the key $4,122.54 support level during the first trading session of next week could intensify the downward move and expose gold to further losses.
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