- Gold price extends the overnight pullback from an all-time high and drifts lower on Friday.
- The downward trajectory picks up pace following the release of the upbeat US NFP report.
- Rising US bond yields lift the US Dollar and exert heavy downward pressure on the metal.
Gold price comes under heavy selling pressure on Friday and extends the previous day's sharp retracement slide from an all-time high, around the $2,078-$2,079 region. The downward trajectory picks up pace in reaction to the upbeat US monthly jobs data and drags the XAU/USD to a three-day low, below the $2,010 level during the early North American session.
The US Dollar (USD) strengthens across the board after the headline NFP print showed that the US economy added 253K new jobs in April, much higher than the 179K anticipated and the previous month's downward revised reading of 165K. Further details revealed that the Unemployment Rate unexpectedly edged lower to 3.4% from 3.5 and Average Hourly Earnings rose to 4.4% from 4.3%. This, in turn, allows the USD Index (DXY), which tracks the Greenback against a basket of currencies, to recover further from over a one-week low touched on Thursday and weighs heavily on the US Dollar-denominated Gold price.
The upbeat labor market report, meanwhile, might have dashed hopes for an imminent pause in the Federal Reserve's (Fed) rate-hiking cycle in June. This, in turn, leads to an intraday spike in the US Treasury bond yields, which further underpins the buck and contributes to driving flows away from the non-yielding yellow metal. Apart from this, a positive turnaround in the global risk sentiment - as depicted by a recovery in the equity markets - further contributes to a steep intraday fall in the Gold price. With the latest leg down, the XAU/USD has snapped a three-day winning streak, though seems poised to register weekly gains.
It will now be interesting to see if the commodity can attract any buyers at lower levels or if the ongoing slide marks the end of over a six-month-old uptrend, which constitutes the formation of an ascending channel on the daily chart. Hence, it will be prudent to wait for strong follow-through selling before confirming that the Gold price has formed a near-term top and positioning for any meaningful corrective decline.
Technical levels to watch
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