Gold Price Analysis: XAU/USD continues to trade on back foot post-NFP as higher US yields, stronger buck weigh

The latest broadly robust US labour market figures, which saw the Unemployment Rate in March fall back to near pre-pandemic levels at 3.6% after a solid 431,000 gain in jobs on the month, have not had a lasting impact on precious metals markets. Spot gold (XAU/USD) prices have continued to trade on the back foot and recently printed fresh session lows under $1924, a reflection of Friday’s slightly stronger US dollar and higher US bond yields. Data out of the US this week has on the whole been very much in fitting with the notion that the US labour market is very tight and inflation remains very high.

These two factors form the underpinning of the Fed’s recent hawkish policy shift that has been so supportive of both US yields and the US dollar, so perhaps in wake of Friday’s jobs data, it isn’t surprising to see these trends continue. Further weighing on gold has been 1) recent positive commentary from Russian Foreign Minister Sergey Lavrov regarding Russo-Ukraine peace talks and 2) downside in crude oil markets after the US reserve release announcement. The former has seen investors unwind some geopolitical risk premia, which typically benefits gold, while the latter has reduced demand for inflation protection, which, again, typically supports gold.

After failing to break back above its 21-Day Moving Average (DMA) earlier in the week in the $1950s, short-term XAU/USD bears may now be targeting a reversal lower towards $1900 and a test of the 50DMA, which resides just below it. Volumes are likely to decline from here ahead of the weekend, so such a move may have to wait until next week. But if the newsflow regarding Russo-Ukraine talks remains positive, the US data economically bullish and the Fed rhetoric (from policymakers and in the minutes) hawkish, the gold bears will be confident.