Gold Price Forecast: Recovery fades as focus shifts to the US Nonfarm Payrolls report

XAU/USD Current price: $1,826.41

• Wall Street trades in the green, while government bond yields hover around their opening levels.
• Investors focus on US employment-related data and particularly on wage growth.
• XAU/USD retreats from around $1,835 as US Dollar buyers hold the grip.

Spot gold advanced on Thursday to trade as high as $1,835.62 a troy ounce. The bright metal benefited from easing US Dollar demand as speculative interest finished digesting the latest from the United States Federal Reserve. In his semi-annual testimony before Congress, Fed’s Chair Jerome Powell hinted that more rate hikes at a faster pace are likely in the near future.

After rallying sharply following the event, the US Dollar began to lose steam, giving up some of its gains. A scarce macroeconomic calendar helped its major rivals in recovering some ground, alongside stock markets’ attempt to come back. Wall Street trades on positive ground, although gains are modest. Market players are also keeping an eye on government bond yields for direction. United States Treasury yields are stable at around Wednesday’s close, giving up from their early peaks.

American data was mixed. On the one hand, US-based employers announced 77,770 job cuts in February, down 24% from the 102,943 cuts announced in January. The encouraging headline hides the fact that it was the highest yearly cut in fourteen years, up 410% from a year earlier. On the other hand, Initial Jobless Claims for the week ended March 3 were up to 211K, worse than the 195K expected.

Employment-related figures are relevant ahead of the February Nonfarm Payrolls report, to be out on Friday. The country is expected to have added 205K new job positions, while the Unemployment Rate is foreseen at 3.4%, unchanged from the previous month. Market players will pay extra attention to wage growth as inflation has returned to the top of investors’ concerns. Average Hourly Earnings are expected to have increased at an annualized pace of 4.7%, higher than the 4.4% previous.

XAU/USD price short-term technical outlook

XAU/USD trades around $1,825, and technical readings in the daily chart suggest the bullish potential remains limited. The pair met sellers around a bearish 20 Simple Moving Average (SMA), providing resistance around the daily high. The 100 SMA advances below the current level and stands near this year's low at $1,804.70. Finally, the Momentum indicator remains directionless, just below its 100 level, while the Relative Strength Index (RSI) indicator turned higher but stands at 44, falling short of anticipating a new leg north.

The 4-hour chart shows that the chances of a continued advance are limited. The pair is retreating from around a mildly bearish 100 SMA while battling around a bearish 20 SMA. The 200 SMA, in the meantime, heads sharply lower, far above the current level. The Momentum indicator stands pat below its midline, while the RSI turned south within neutral levels, favoring a downward extension without confirming it.

Support levels: 1,804.70 1,789.60 1,774.20

Resistance levels: 1,835.60 1,841.05 1,858.30

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