On Thursday, gold (XAU/USD) continued to trade with a positive bias for the second consecutive day, while remaining within the range established during the previous session. A moderate weakening of the U.S. dollar, driven by weaker-than-expected U.S. macroeconomic data released on Wednesday, has remained the primary factor supporting the precious metal for a second straight day. At the same time, expectations of further monetary policy tightening by the U.S. Federal Reserve (Fed), along with persistent geopolitical risks, continue to support the U.S. dollar and limit gold's upside ahead of the release of the U.S. labor market data.

According to the ADP (Automatic Data Processing) report, U.S. private-sector employment increased by 98,000 in June, falling short of both the revised reading for the previous month (122,000) and the market consensus forecast of 113,000. In addition, the ISM Manufacturing PMI declined from 54.0 to 53.3 in June. Meanwhile, the Prices Paid Index fell from 82.1 to 73.0, while the Employment Index edged up from 48.6 to 49.7.

Additional pressure on the U.S. dollar came from the recent decline in oil prices, which significantly reduced short-term inflation expectations and prompted traders with bullish dollar positions to adopt a more cautious stance. This, in turn, provided additional support for gold.

Nevertheless, CME Group's FedWatch Tool indicates that market participants continue to price in approximately a 64% probability of a Federal Reserve rate hike in September and nearly an 85% chance of additional policy tightening before the end of the year. Investor confidence strengthened following comments from Federal Reserve official Kevin Warsh, who reaffirmed the Fed's commitment to its 2% inflation target and its willingness to maintain a restrictive policy stance despite political pressure to cut interest rates. Moreover, several Fed officials have stated that further interest rate increases may be required to achieve the inflation target.

Taken together, these factors are limiting the U.S. dollar's downside while restraining gains in non-yielding gold. At the same time, geopolitical tensions remain elevated. Talks between Iran and the United States in Qatar concluded without meaningful progress, while the situation in the Strait of Hormuz remains unstable.

Against this backdrop, geopolitical risks continue to support demand for the U.S. dollar, while investors remain focused on the upcoming release of the U.S. Nonfarm Payrolls (NFP) report. These data will be crucial for assessing the Federal Reserve's next policy steps and are likely to determine the near-term direction of both the U.S. dollar and gold.

From a technical perspective, the rally driven by short-covering encountered resistance at the 50-period Simple Moving Average (SMA), preserving the bearish bias in the near term. As for the oscillators, the MACD has turned higher into positive territory, while the RSI has also moved into positive territory.

The nearest resistance is located at $4,122.14, followed by the 100-period SMA at $4,145.00. On the other hand, initial support is seen at $4,050, a level that has already been tested. A further decline could expose the 20-period SMA and lead to another test of the structural low around $3,940.