US employment data release: a mixed signal for the dollar
The US labor market delivered a surprise on Friday, May 8, 2026, as the April report significantly exceeded expectations. The economy added 115,000 jobs, well above the forecast of 65,000, although notably lower than the previous reading of 185,000, indicating a gradual cooling in hiring momentum. The unemployment rate remained stable at 4.3%, in line with forecasts and the previous month's figure, reflecting a labor market that remains resilient despite broader macroeconomic headwinds.
On the salary front, (MoM) stood at 0.2%, below the forecast of 0.3% and matching the previous figure. This softer wage growth is a constructive signal for gold bulls as it eases concerns about persistent labor market inflation pressure, reducing the urgency to maintain a hawkish stance.
Overall, the data paints a nuanced picture: Job creation exceeded expectations, but weaker wage growth and a stable unemployment rate failed to provide a strong catalyst for further Fed tightening. Historically, this type of uncertainty has supported demand for gold as investors seek protection against changes in monetary policy expectations.
Technical Analysis: Maintains Bullish Recovery Potential as DXY Weakens
On the daily chart, it continues to trade within a descending channel structure that has shaped the price action over the past few months. This pattern reflects a medium-term corrective phase following the all-time high of $5,595 recorded at the end of January 2026, and the price is currently consolidating around the $4,720 to $4,740 area.
Despite the broader bearish channel structure, bearish momentum appears to be weakening, suggesting that buyers may be slowly regaining control. The current price action also suggests a possible accumulation phase, in which institutional participants build positions ahead of a broader directional move.
The main technical barrier remains the upper resistance trend line of the descending channel. A confirmed breakout and daily close above this level would indicate a major change in the market structure and could open the way towards the next key psychological resistance at $5,000.
From perspective, the daily chart also shows a descending channel formation. The price recently reacted from the channel's upper resistance line, indicating that the dollar's bullish momentum may remain limited in the near term. As long as the DXY fails to break above the resistance trend line, the index has the potential to continue weakening towards the 97 area.
This DXY weakness could provide additional support to gold prices, as a weaker US dollar generally increases the attractiveness of non-profitable assets like gold. The inverse correlation between DXY and XAUUSD remains a major factor supporting gold's bullish recovery scenario.
For the bullish outlook to remain valid, XAUUSD must continue to hold above the key support zone between $4,300 and $4,560. A break below this structure would invalidate the recovery scenario and expose gold to deeper corrective pressure.
Conclusion
The combination of moderate inflationary pressures in the labor market, weakening DXY momentum, and a technically constructive gold chart keeps the overall outlook cautiously bullish for XAUUSD.
Although the better-than-expected NFP data may lead to short-term volatility and temporary dollar strength, the broader market structure still favors a potential bullish continuation as long as support levels remain intact. Meanwhile, DXY's rejection from channel resistance reinforces the possibility of further dollar weakness towards 97, which could become an additional catalyst for gold's recovery.
Looking ahead, traders should closely monitor two important triggers:
A confirmed break above the descending channel resistance on XAUUSD.
Further developments surrounding geopolitical tensions between the United States and Iran, which continue to heavily influence safe haven demand.
For now, the market bias remains cautiously bullish, with the descending channel resistance and the $5,000 psychological level acting as the key zones to watch on the daily timeframe.
