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- XAU/USD slumps, set to lose over 2.5% weekly as traders scale back Fed rate cut bets and risk appetite improves.
- April NFP beats estimates; unemployment steady at 4.2%, curbing aggressive Fed easing expectations.
- China says the US is open to trade talks, boosting sentiment and pressuring Gold.
Gold (XAU/USD) price edged down over 0.35% on Friday, poised to end the week with losses of over 2.50%. An improvement in risk appetite due to easing trade tensions alongside a strong labor market report in the United States (US) prompted investors to book profits ahead of the weekend. At the time of writing, XAU/USD trades at $3,226 after retreating from a daily high of $3,269.
Overnight news revealed that China’s commerce ministry said the US was willing to begin trade talks and tariffs and reassured Washington that Beijing’s door is open for discussions.
Bullion prices extended their losses on the headline that Nonfarm Payrolls in April crushed estimates, with the Unemployment Rate holding firm compared to March numbers. XAU/USD’s drop towards the day’s low of $3,222 was precipitated by traders reducing their bets that the Federal Reserve (Fed) would cut rates three times instead of four.
US Treasury yields rose sharply, but the US Dollar Index (DXY), which tracks the Greenback’s performance against a basket of six other currencies, tumbled 0.20% to 99.98.
After the data release, investors rushed to price in 78 basis points of Fed rate cuts, as revealed by data from Prime Market Terminal.
Source: Prime Market Terminal
Next week, Gold traders are eyeing the release of the Federal Reserve’s monetary policy meeting, during which the US central bank is expected to keep rates on hold.
Daily digest market movers: Gold price edges lower as US Treasury yields jump
- Recently released data pushed US bond prices down, increasing US Treasury yields. The US 10-year Treasury note yield is soaring nine basis points, up to 4.312%. At the same time, US real yields rallied nine and a half bps to 2.062%, as shown by the US 10-year Treasury Inflation-Protected Securities yields.
- US Nonfarm Payrolls increased by 177K in April, down from the downwardly revised number of 185K in March but exceeding estimates of 130 K. Earlier in the week, a dismal ADP National Employment Change report suggested that companies were hiring fewer people than the NFP revealed.
- The US Unemployment Rate remained unchanged at 4.2%, which is aligned with forecasts and might prevent the Federal Reserve (Fed) from easing its policy.
XAU/USD technical outlook: Gold price remains bullish but poised to drop below $3,200
The Gold price correction extended below $3,250 after traders tried to reclaim $3,270 but failed. The Relative Strength Index (RSI) shows that sellers are gathering steam; hence, a drop below the $3,200 figure is likely.
In that outcome, the next support would be the April 3 high, which turned support at $3,167. Once surpassed, the next stop would be the 50-day Simple Moving Average (SMA), at $3,080. Conversely, if buyers lift Gold prices above $3,300, it would clear the path to challenge $3,350, followed by $3,400.
