Gold price forecast:
- gold prices Under pressure from the rise in US Treasury bond prices
- Nominal yields jumped as strong US economic data reinforced the case for additional monetary tightening
- US jobs data on Friday may boost XAU /American dollarNegative bias if hiring growth Surprises to the upside
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Most read: US stocks plunge as yields rise, and the S&P 500 has charted a bearish double top pattern
Gold prices fell on Thursday and extended losses from the previous session, slumped by rising interest rates in the fixed-income space in both Europe and the United States after an hawkish repricing of the central bank’s monetary policy.
In late afternoon trading, XAU/USD was down around 0.3% at $1,910 as US yields surged, with the 2-year note above 5.0% and the 10-year note rising above 4.0%, the former hitting a fresh high. since 2007 and the latter matched its peak in March in the wake of strong US economic reports.
American productivity increases everyday performance
Source: TradingEconomics
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According to payroll processing company ADP, the number of private sector employees rose substantially in June, prompting US companies to add nearly half a million workers, more than double the median forecast in a Bloomberg News survey.
Although the ADP survey tends to be weakly correlated with national employment data, it still provides valuable information about the labor market, which currently appears to be in excellent health and firing on all cylinders despite the increasingly restrictive monetary policy environment.
Incoming economic data for the United States
Source: DailyFX Economic Calendar
|
change in |
Longs |
Shorts |
Hey |
| Daily | 3% | -13% | -1% |
| weekly | 2% | -15% | -2% |
We will get more clues about the broader employment trend on Friday, when the US government releases the June Nonfarm Payrolls (NFP) report. It is estimated that the US economy created 225,000 jobs last month, a result that saw the unemployment rate drop to 3.6% from 3.7% previously.
The Wall Street consensus has been underestimating job growth for 13 straight months, so it wouldn’t be surprising to see another hot, higher-than-expected NFP report tomorrow. If this scenario plays out, price expectations could continue to drift in a more hawkish direction, creating a hostile landscape for non-yielding assets, such as gold.
For the reasons mentioned earlier, precious metals will remain vulnerable and biased to the downside for now, which means more losses are likely in the coming days and weeks before some stabilization later in the summer.
From a technical point of view, gold turned bearish after it failed to remove the trend line resistance at $1.935 earlier in the week. After this rejection, XAU/USD quickly headed south, with the price currently approaching the $1,895 Fibonacci support, which is the 38.2% retracement of the September 2022/May 2023 high.
If $1,895 is pulled, the selling momentum could build, paving the way for a possible pullback towards the 200-day simple moving average that is hovering slightly above $1,860.
In the unlikely scenario the bulls regain control of the market, initial resistance extends from $1930 to $1935. With more strength, the focus moves higher to $1,975.