Gold Price Forecast: XAU/USD hits three week-low amid high US bond yields

Gold price strumbled for the third consecutive trading session and posted a three-week low as high US Treasury bond yields weighed on the non-yielding metal amidst a soft US Dollar (USD) during Thursday’s trading session. At the time of writing, the XAU/USD exchanges hands at $1,933.21, down 0.02%, as Friday’s Asian session commences.

Despite a soft US Dollar, higher Treasury bond yields continue to pressure the non-yielding gold as investors await US NFP

Wall Street finished Thursday’s session with losses as US Treasury bond yield soared. The US 10-year Treasury bond yield rose nine basis points, up at 4.179%, but failed to underpin the greenback. US Real yields, which is nominal yields minus inflation expectations in 10 years, advanced and climbed ten basis points, up to 1.99%, its highest level since the week of July 3, when it hit 2.15%.

Data-wise, the US economic docket featured Initial Jobless Claims for the week ending July 29, hit 227K, as foreseen, a sign that even though it could encourage investors to bet the labor market is easing, releases in the latest three months, make difficult to asses the job market trend.

After that data release, the ISM Non-Manufacturing PMI for July decelerated to 52.7 from June’s 53.9 and missed estimates of 53. The data portrays business activity as slowing down, though it remains to be seen if the services segment in the US drops to recessionary territory.

Although data was mixed, US Treasury bond yields continued to climb. XAU/USD began the session at a nearby $1,938.72 before dropping toward the day lows amid a softer greenback.

XAU/USD traders focus on Friday’s July US Nonfarm Payrolls report release. Figures are expected to show the US economy added 200K jobs to the economy, with the Unemployment Rate expected to remain at 3.6%. Any upward deviations from the forecast could be positive for the buck and negative for XAU. That could weigh on Gold and put into play a test of the 200-day EMA at $1,907.49. On the contrary, XAU/USD could rally if the outcome misses estimates.

XAU/USD Price Analysis: Technical outlook

From a daily chart perspective, XAU/USD is neutral to downward biased once the yellow metal dipped below the 50, 20, and 100-day Exponential Moving Averages (EMAs), each at  $$1950.18, 1,949.83, and   $1,941.06. Although XAU/USD is testing the May 30 daily low of $1,932.20, a decisive break could expose a support trendline that passes around $1,915/20 before Gold reaches $1,900. Otherwise, if buyers hold prices above the former, first resistance would emerge at the 100-day EMA, followed by the confluence of the 20 and 50-day EMAs, at around $1,949-$1,950.