Gold price pares intraday losses, keeps the red amid modest USD strength ahead of NFP

  • Gold price corrects further from the all-time high amid hawkish remarks by Fed officials.
  • Some follow-through USD buying exerts some pressure ahead of the crucial US NFP data.
  • Persistent geopolitical tensions should limit the downside for the safe-haven XAU/USD.

Gold price (XAU/USD) drifts lower for the second straight day on Friday and maintains its offered tone through the early part of the European session. The US Dollar (USD) builds on the overnight recovery from a nearly two-week low and remains well supported by hawkish comments from Federal Reserve (Fed) officials, which, in turn, undermines the commodity. Apart from this, the downfall could further be attributed to some repositioning trade ahead of the release of the US monthly employment details. 

The popularly known Nonfarm Payrolls (NFP) report will be looked upon for fresh cues about the Fed’s rate-cut path, which, in turn, will drive the USD demand and provide a fresh directional impetus to the non-yielding Gold price. In the meantime, persistent geopolitical tensions stemming from the Russia-Ukraine war and the risk of a further escalation of conflicts in the Middle East should act as a tailwind for the safe-haven XAU/USD. This should limit any meaningful corrective slide from the all-time peak. 

Daily Digest Market Movers: Gold price finds some support amid persistent geopolitical tensions

  • Federal Reserve officials took a cautious approach in comments on the outlook for possible interest rate cuts this year, which, in turn, prompts some profit-taking around the Gold price. 
  • Richmond Fed President Thomas Barkin said that he was open to interest rate cuts once it is clear that progress on inflation will be sustained and applied more broadly in the economy.
  • Minneapolis Fed Bank President Neel Kashkari said that he penciled in two rate cuts this year at the March meeting, though none may be required if inflation continues to move sideways.
  • The hawkish comments keep the US Treasury bond yields elevated, which assists the US Dollar in building on the overnight bounce and further exerts pressure on the non-yielding yellow metal. 
  • Geopolitical tensions in the Middle East ratcheted up amid persistent fears that an Iran retaliatory strike against the Israeli attack on its embassy in Syria earlier this week could be imminent.
  • This, along with the protracted Russia-Ukraine war and a devastating earthquake in Taiwan, continues to weigh on investors’ sentiment and should lend support to the safe-haven XAU/USD.
  • Investors now look to the US monthly jobs report, which is expected to show that the economy added 200K jobs in March vs the 275K previous, and the unemployment rate held steady at 3.9%. 
  • Apart from this, the Average Hourly Earnings will influence market expectations about the Fed’s rate-cut path, which, in turn, will drive the USD and provide a fresh impetus to the commodity.

Technical Analysis: Gold price bulls not ready to give up yet, $2,265 holds the key for bulls

From a technical perspective, weakness below the $2,265 area could expose the weekly swing low, around the $2,229-2,228 region, with the $2,250 level acting as an intermediate support. Some follow-through selling has the potential to drag the Gold price toward the $2,200 psychological mark, which is likely to act as a strong base. That said, a convincing breakdown through the said handle should pave the way for some meaningful corrective decline. 

On the flip side, a move beyond the $2,280 area might confront some resistance near the Asian session peak, just ahead of the $2,300 round-figure mark. Acceptance above the latter will be seen as a fresh trigger for bullish traders and set the stage for an extension of the recent breakout momentum witnessed over the past two weeks or so.

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