• Gold Price preserves its bullish momentum following Wednesday's rebound.
  • Mixed data releases from the US weigh on the greenback on Thursday.
  • 10-year US Treasury bond yield settles around 2.9% ahead of US jobs report.

Gold Price extended its recovery beyond $1,850 on Thursday after having registered daily gains on Wednesday. XAUUSD paid no attention to rising US Treasury bond yields mid-week and took advantage of the broad-based selling pressure surrounding the euro and the British pound. 

Dollar rally loses its steam

The fact that gold managed to reclaim the critical 200-day SMA shows that buyers remain interested. Friday's May jobs report from the US could ramp up the market volatility ahead of the weekend. Meanwhile, the renewed dollar weakness on Thursday amid mixed data releases from the US help XAU/USD keep its footing. 

Also read: Gold Price Forecast: XAUUSD in search of a clear direction, awaits NFP.

The monthly report published by the ADP showed on Thursday that private-sector employment in the United States rose by 128,000 in May, compared to the market forecast of 300,000. April's reading of 247,000 got revised lower to 202,000, Commenting on the data, “the job growth rate of hiring has tempered across all industries, while small businesses remain a source of concern as they struggle to keep up with larger firms that have been booming as of late," said Nela Richardson, chief economist at ADP. On the other hand, the US Bureau of Labor Statistics (BLS) reported that Unit Labor Costs increased by 12.6% in the first quarter following the 11.6% jump recorded in the previous quarter.

Gold Price ignores rising US yields for now

Comments from Fed officials provided a boost to the US Treasury bond yields on Wednesday and the dollar outperformed its rivals. St. Louis Federal Reserve Bank President James Bullard said on Wednesday that he was sceptical about recession probabilities. On a similar note, Richmond Fed President Thomas Barkin told Fox Business that the latest data or the actions of business executives were not suggesting that the economy was moving toward a recession. In addition to these remarks, the Fed's balance sheet reduction started on June 1st, allowing the 10-year yield to climb to the 2.9% area.

Federal Reserve Headquarters in Washington, D.C.

Federal Reserve building in Washington, D.C.

Nevertheless, XAUUSD stayed relatively resilient despite rising yields. XAUEUR and XAUGBP pairs both gained more than 1% on Wednesday, revealing that gold was able to capture some of the capital outflows out of the euro and the British pound. The European Central Bank (ECB) and the Bank of England (BOE) face a tough balancing act as the worsening economic outlook alongside high inflation causes policymakers to reassess how they should approach policy tightening moving forward.

The BLS will release the Nonfarm Payrolls (NFP) data for May on Friday. Markets expect payrolls to rise by 325,000 following April's increase of 428,000. Unless the headline NFP print offers a big negative surprise, investors are likely to react to the wage inflation data. On a yearly basis, Average Hourly Earnings are forecast to arrive at 5.2%, down from 5.5% recorded in April. The Fed grows increasingly concerned about wage growth feeding into consumer inflation. In case the US job report shows an improvement in the Labor Force Participation Rate and a retreat in wage inflation, the dollar could come under selling pressure and open the door for additional gold gains and vice versa.

Gold Price technical outlook

Gold Price dropped below the key 200-day SMA, which is currently located at $1,840, on Wednesday but managed to close the day above that level. XAUUSD faces next resistance at $1,865 (static level) ahead of $1,875 (Fibonacci 38.2% retracement of the latest downtrend) and $1,890 (100-day SMA).

On the downside, a daily close below $1,840 could be seen as a significant bearish development and attract sellers. In that case, additional losses toward $1,830 (June 1 low) and $1,810 (the end-point of the downtrend) could be witnessed.

Meanwhile, the Relative Strength Index (RSI) indicator on the daily chart recovered toward 50, suggesting that gold sellers remain on the sidelines for the time being.

Gold Price correction looks completed

 

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