Gold Price Analysis: XAU/USD choppy and rangebound in $1720s
Spot gold prices (XAU/USD) have been choppy on Monday but have largely stuck within a $1720-$1730 range. Spot prices have remained fairly well supported above the 21-day moving average at $1721, with USD weakness since the arrival of US market participants also helping to keep gold supported. At present, the precious metal trades flat on the day.
Driving the day
As noted, USD weakness (the Dollar Index has fallen from above 93.00 into the 92.50s over the past few hours) is helping to support dollar-denominated spot gold. However, gains are being capped by a jump in US government bond yields from last Thursday’s levels; 10-year yields are back comfortably above the 1.70% mark following last Thursday’s close under 1.68% and real yields are also a little higher, with the 10-year TIPS yield up about 3bps. As a reminder, non-yielding precious metals tend to have a negative correlation to the real yields on fixed-income assets, so when yields go up, precious metals become comparatively less attractive.
Gold Price Forecast: XAU/USD struggles to break out of range despite USD selloff
The XAU/USD pair started the new week under modest bearish pressure and dropped toward $1,720 during the Asian trading hours but didn't have a difficult time staging a recovery. With the greenback losing its strength in the second half of the day, gold turned flat near $1,730. Nevertheless, the precious metal is struggling to preserve its bullish momentum and was last seen posting small daily losses at $1,727.50.
On Friday, the data published by the US Bureau of Labor Statistics showed that Nonfarm Payrolls in March surged by 916,000 to beat the market expectation of 647,000 by a wide margin. The positive impact of this impressive jobs report on market sentiment became apparent on Monday when American investors returned from the Easter holiday. The S&P 500 Index opened sharply higher and is currently sitting at an all-time high of 4,067, rising 1.2% on the day.
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