Gold Price Forecast: XAU/USD drops to $2,020, eyes on US ADP data

Gold price (XAU/USD) loses momentum during the early Asian session on Wednesday. The renewed US Dollar (USD) demand drag the yellow metal lower. Meanwhile, the US Dollar Index (DXY), the gauge of the value of the USD against a weighted basket of currencies used by US trade partners, rebounds to 104.00. The Treasury yields edge higher, with the 10-year yield dropping to 4.16%. The gold price currently trades near $2020, up 0.01% for the day.

The US Dollar Index (DXY) recovers from monthly lows despite lower US Treasury bond yields. Data released on Tuesday showed that the November ISM Services PMI exceeded expectations, with an increase of 52.7 from the previous reading of 51.8. Meanwhile, JOLTS Job Openings declined by 617,000 to 8.73 million in October, according to a Bureau of Labour Statistics report. The figure registered the lowest level since March 2021.

Furthermore, a gloomy picture of China's economic prospects dampened optimism across the commodities market and create headwinds for gold price. On Tuesday, the rating agency Moody’s cut its outlook on China’s sovereign credit rating to negative, citing the increasing risks to growth and a property sector crisis in the country. This, in turn, might cap the upside in gold prices as China is the world’s major gold consumer.

Gold traders will keep an eye on the US ADP private employment and Unit Labor Cost data on Wednesday. Later this week, the Chinese Trade Balance for November will be due on Thursday. The attention will turn to the US employment data on Friday, including the Nonfarm Payroll (NFP), Average Hourly Earnings, and Unemployment Rate.

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