- Gold price consolidates a recovery as the United States Dollar licks its wounds.
- A weak US Nonfarm Payrolls and soft wage inflation data are needed to revive Federal Reserve bets for a pause.
- The $1,992 level appears a tough nut to crack for Gold buyers but a bullish RSI could lend support.
Gold price is treading water above the $1,970 level ahead of the release of United States Nonfarm Payrolls (NFP), with the US Dollar (USD) licking its wounds in the face of an upbeat market mood and mixed US economic data releases.
United States Nonfarm Payrolls in the spotlight
The US Dollar tumbled across the board on Thursday, tracking the persistent weakness in the US Treasury bond yields, as mixed economic data from the United States released heightened bets of the US Federal Reserve (Fed) pausing its interest-rate hiking cycle on June 14.
ADP reported that US private sector employment increased by a seasonally adjusted 278,000 in May, well above expectations for a 170,000 increase. Meanwhile, weekly Initial Jobless Claims rose to 232,000, compared with 235,000 expected. Later in American trading, the US ISM Manufacturing PMI and its sub-components showed a contraction in May, except for the Employment Index. The quarterly Unit Labor Costs, an indicator closely watched by the Fed, declined to 4.2% vs. 6.0% expected and 6.3% previous.
Despite the strong ADP jobs report, the rest of the weak data, coupled with Philadelphia Federal Reserve Bank President Patrick Harker's dovish remarks, were enough to bolster expectations for a Fed rate hike pause. Harker said that it is time for the central bank to "hit the stop button" for at least one meeting, reiterating his comments from Wednesday.
Markets are now pricing a 74% probability of a Fed pause this month, compared with odds of about 38% seen on Monday. The benchmark 10-year US Treasury bond yields have plunged from near 3.85% to test 3.50% so far this week on renewed dovish Fed bets.
All eyes remain on US Nonfarm Payrolls data to gauge whether a 25 basis point Fed rate hike in June is totally off the table. The data is critical to determining the next price direction in the US Dollar, as well as the USD-denominated Gold price. The US economy is likely to have created 190,000 jobs in May, compared with the more-than-expected 253,000 jobs added in April. The Unemployment Rate is foreseen at 3.5% in the fifth month of this year, up from the 3.4% seen in April. Average Hourly Earnings are seen rising at 4.4% in May on year, the same pace as in April.
Gold price technical analysis: Daily chart
The daily technical setup is turning in favor of Gold buyers, with the 14-day Relative Strength Index (RSI) flirting with the 50 level that separates the bullish and bearish zones.
However, Gold optimists continue to trade with caution amid a Bear Cross in play and ahead of the critical United States labor market report.
Should the headline US Nonfarm Payrolls disappoint markets along with softer wage inflation, Gold price is likely to extend the recovery momentum beyond the flattish 50-Daily Moving Average (DMA) resistance at $1,992.
Ahead of that, Gold price needs to take out the downward-pointing 21 DMA at $1,984. Acceptance above these resistance levels will put the $2,000 threshold back on bulls’ radars.
Weekly closing above the 50 DMA barrier is critical to sustain the turnaround in Gold price from two-month troughs.
However, in case the US jobs report suprises markets to the upside and reinstates a 25 bps Federal Reserve rate hike expectation for this month, the Bear Cross will overpower and hit Gold price toward the recent range lows near $1,953.
If the selling interest gathers steam, Gold bears could challenge the mildly bullish 100 DMA, now at $1,939.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD consolidates at three-week lows near 1.0800 Premium

EUR/USD bottomed at 1.0775, the lowest level since November 15, and then rebounded towards 1.0800. The US Dollar remains resilient in the market despite lower yields and mixed US data. On Wednesday, more job figures are due with the ADP report and Unit Labor Costs data, ahead of Friday's NFP.
GBP/USD holds to losses around 1.2600

GBP/USD dropped further on Tuesday, reaching a one-week low below 1.2600 amid a stronger US Dollar. The Greenback holds firm even as the US Treasury yield slides. More US jobs data is due on Wednesday with the ADP report.
Gold extends slide, more pressure seen under $2,010 Premium

Following Monday's decline, Gold struggled to stage a convincing rebound and retreated below $2,020 in the second half of the day on Tuesday. Although the benchmark 10-year US Treasury bond yield is down more than 1%, renewed USD strength doesn't allow XAU/USD to limit its losses.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: This is the level to beat as BTC eyes $50,000 next

Bitcoin price remains bullish, sustaining the primary trend and retesting levels last seen in April 2022. However, one specifical level remains crucial to the upside potential of the king of cryptocurrency, the midline of the weekly supply zone.
Nio Stock Earnings: NIO holds onto 3% gain despite Moody cutting China outlook

Nio (NIO) stock's initial 5% gain on Tuesday has transitioned to a 3% gain near $7.55. The Chinese electric vehicle (EV) manufacturer released third-quarter earnings that showed sales of higher margin SUVs surged 258% from the most recent quarter and 64% from a year ago.