• Gold down 0.4% as stronger USD, lower Treasury yields follow weak US jobs data.
  • Missed US April Nonfarm Payrolls heighten focus on potential Fed rate adjustments in September.
  • Market awaits Fed officials' comments and key data, including jobless claims and consumer sentiment indices.

Gold price slipped during the North American session, dropping around 0.4% amid a strong US Dollar and falling US Treasury bond yields. A scarce economic docket in the United States (US) would keep investors focused on Federal Reserve ( officials during the week after last Friday’s US employment report.

The XAU/USD trades at $2,315 after hitting a daily high of $2,329. The financial markets narrative is focused on when the Fed will begin to ease policy following the release of softer economic data. The US Department of Labor revealed that April’s Nonfarm Payrolls came in at 175K, missing estimates and trailing March’s upward revised 315K figure.

Following the data release, the CME FedWatch Tool shows odds for a quarter of a percentage point cut in September increased from 55% before the report to 85%.

Nevertheless, recent hawkish comments by Minneapolis Fed President Neel Kashkari, who said that the Fed might stand put on interest rates and opened the door to raising the federal funds rate if inflation doesn’t resume its downtrend, bolstered the Greenback.

The economic docket for the current week will examine further Fed officials crossing the wires, along with Initial Jobless Claims for the week ending May 4 and the preliminary release of the University of Michigan Consumer Sentiment.

Daily digest market movers: Gold price rises toward $2,320 as US yields fall

  • Gold prices fell amid lower US Treasury yields and a strong US Dollar. The US 10-year Treasury note is yielding 4.457%, down three basis points (bps) from its opening level. The US Dollar Index (DXY), which tracks the Greenback's performance against six other currencies, rallies 0.52% to 105.42.
  • Last Friday, April's US NFP missed estimates and trailed March's figures. That alongside the Institute for Supply Management (ISM) PMIs in the manufacturing and services sectors entering contractionary territory might undermine the US Dollar, a tailwind for the golden metal.
  • Gold advancing more than 12% so far in 2024 is courtesy of expectations that major central banks would begin to reduce rates. Renewed fears that the Middle East conflict could resume between Israel and Hamas can sponsor a leg up in XAU/USD prices.
  • According to Reuters, the People’s Bank of China (PBoC) continued to accumulate Gold for the 18th straight month, adding 60,000 troy ounces to its reserves amid higher prices.
  • After the data release, Fed rate cut probabilities increased, with traders expecting 36 basis points of rate cuts toward the end of the year.

Technical analysis: Gold price slumps below $2,320

Gold’s uptrend remains in place despite retreating on Tuesday. According to the Relative Strength Index (RSI), momentum favors the buyers as the RSI stands in bullish territory. Therefore, buyers could capitalize on “buying the dip.”

If XAU/USD slumps past the $2,300 mark, that could put pressure on the bulls, as the latest cycle low is seen at the May 3 low of $2,233. Once cleared, that could open the door to test the 50-day Simple Moving Average (SMA) at $2,249.

On the other hand, if buyers lift the golden metal price, the next resistance would be the April 26 high, the latest cycle high at $2,352. Once cleared, the next stop would be the $2,400 threshold, followed by the April 19 high at $2,417 and the all-time high of $2,431.

Gold FAQs

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.


Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content

Recommended content

Editors’ Picks

GBP/USD consolidates above 1.2700 mark as traders await BoE policy update

GBP/USD consolidates above 1.2700 mark as traders await BoE policy update

GBP/USD ticks lower on Thursday and snaps a three-day winning streak to the weekly top. The USD draws support from rebounding US bond yields and exerts pressure on the major. The downtick lacks follow-through as traders look to the BoE before placing directional bets.


EUR/USD escapes Wednesday’s holiday volatility trap, set for wait to meaningful data

EUR/USD escapes Wednesday’s holiday volatility trap, set for wait to meaningful data

EUR/USD cycled on Wednesday with US markets out for a midweek holiday, and the Fiber heads into the back half of the trading week with mid-tier data on the offering, leaving investors to look ahead to Friday’s PMI activity figures for meaningful data releases to drive sentiment in either direction.


Gold: Will XAU/USD buyers recapture key resistance near $2.340?

Gold: Will XAU/USD buyers recapture key resistance near $2.340?

Gold price regains upside traction early Thursday after the Juneteenth holiday lull. The US Dollar pauses its decline as Treasury bond yields edge higher amid risk aversion. The daily RSI gradually moves above the midline, supporting the Gold price upside.

Gold News

Bitcoin price continues to plummet as whale activities deepen

Bitcoin price continues to plummet as whale activities deepen

Bitcoin's price fell below $65,000 on Wednesday following Increased whale activities that may be sell orders. Meanwhile, hedge funds have experienced a drag in their Bitcoin exposure, which may be fueled by consistent outflows among Bitcoin ETFs.

Read more

Will the BoE signal that rate cuts are looming?

Will the BoE signal that rate cuts are looming?

At its latest gathering, the Bank of England appeared dovish enough to encourage market participants to assign a decent chance for a first quarter-point rate cut in June, but that didn’t last for long as the hotter-than-expected inflation data for April prompted investors to take their summer rate cut bets off the table.

Read more