Gold price retreats toward $1,850 in lackluster market ahead of US NFP

  • The price of gold is fading in its bullish momentum around a new monthly high.
  • Indecision over the Fed’s next moves, mixed US jobs hints spell trouble for traders during the pre-NFP trade lull.
  • Pessimistic employment impressions, ISM data could propel XAUUSD, Biden speech as well.

Gold price fails to extend a two-day uptrend, despite refreshing the monthly high, amid market anxiety ahead of key US data/events early Friday. That said, the quote remains under pressure around the intraday low around $1,870, even as bulls renewed a high from several days earlier in Asia. In doing so, the precious metal is consolidating its recent gains amid lackluster markets and mixed hints on the US jobs report, as well as the US Federal Reserve (Fed)’s next moves.

Dollar and yields tumble on market indecision

Although the precious metal remains lackluster, it maintains an inverse relationship with the US Dollar and yields as traders await the US Nonfarm Payrolls (NFP) and ISM Services PMI for May. That said, US Dollar Index (DXY) stabilizes around 101.75-80, after falling the most in two weeks, while following the slow 10-year US Treasury yields surrounding 2.91% by press time.

Also Read: Gold Price Prediction: Will XAUUSD Extend Upside Break on US NFP?

Weaker early signals for NFP keep gold price higher

First pessimistic signals for today US non-farm payrolls (NFP), expected at 325,000 vs. 428,000 previously, points to a further rise in XAUUSD, as a weaker figure may prevent the Fed from raising rates faster/heavier. On Thursday, the US ADP employment change fell to 128,000 for May, from a forecast of 300,000 and a previous reading revised down to 202,000. The US initial weekly jobless claims, on the other hand, fell to 200,000 from the forecast 210,000 and 211,000 previously. In addition, non-farm productivity and unit labor costs improved in the first quarter, at -7.3% and 12.6% respectively, compared to -7.5% and 11.6% for the market consensus.

Fedspeak weighs on prices

WE Fed policymakers continue to suggest the quickest route to monetary policy normalization as they fear faster inflation. On Thursday, Federal Reserve Vice Chairman Lael Brainard and Cleveland Fed Chair Loretta Mester repeated statements suggesting higher odds favoring Fed aggression in rate hikes.

US Federal Reserve

In addition, risk-negative headlines regarding China, due to the Dragon Nation’s status as one of the largest consumers of bullion in the world. Deputy United States Trade Representative (USTR) Sarah Bianchi appears to have issued the latest challenge to market sentiment, as well as the shiny metal, as the diplomat said, “USTR is seeking a ‘strategic realignment’ with China, a tariff structure that ‘makes sense’.” The mood was tested by statements such as “‘All options are on the table’ regarding tariff decisions on Chinese imports”. USTR Bianchi also suggested faster trade talks with Taiwan, which may not sit well with China and therefore challenge bullion prices. foreigners, Zhao Lijian, expressed his aversion to the US law banning imports from Xinjiang.

It should be noted that US President Joe Biden is ready for a speech right after the release of the NFP and could convey the employment scenario in the United States. Biden has been bullish lately and so may try to paint a rosy picture of the jobs report, despite the outcome. Even so, any downbeat and unexpected comments could put further downward pressure on the price of gold.

Gold Price Technical Outlook

Gold price fades on its bullish momentum after refreshing its monthly high as the overbought RSI challenges the metal’s upside breakout from $1,867 to $68, holding immediate support including the 200-SMA and 38 retracement .2% Fibonacci of the April-May slowdown.

Pullback moves, however, remain elusive as the previous resistance line from late April acts as an additional filter to the south around $1,855.

In a case where XAUUSD breaks below $1,855 resistance has turned into support, the likelihood of further dips towards the weekly low near $1,828 cannot be ruled out.

Alternatively, a convergence of the previous support line from mid-May and the 50% Fibonacci retracement level around $1,893 looks like a tough problem for short metal buyers.

Thereafter, the late April high around $1,920 could attract gold buyers.

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