Personally, I vote for the battle being a test and a way to lure the Elves into over-confidence. That way, we make Morgoth more terrible and less like a bad movie villain. I agree that Morgoth should be weakened by his Eastern campaign, but I don't think that he's afraid that the Elves could break into Angband and really harm him at this point. I also agree that he could be fearing the attack of the Valar - and if he does, he would keep the Balrogs off the field - to guard him if necessary, but also because he might think that a bigger attack could increase the risk of the Valar intervening. He should be happy or at least content after the battle, having gotten intel about the Elven defence and their general fighting and coordinating abilities. Gothmog doesn't have to be happy, but could be informed that his time will come.