- Gold price pulls back sharply from a multi-year high in reaction to upbeat US jobs data.
- Rising US Treasury yields trigger a short covering move for the dollar.
- The risk aversion momentum fails to impress the bulls or support the safe haven XAU/USD.
the price of gold It struggles to find acceptance above the technically significant 200-day SMA and pulls back from the nearly four-month high hit earlier this Friday. The intraday decline is picking up in reaction to the positive US jobs report and dragging XAU/USD to levels below $1,780 early in the American session.
US employment data beats market expectations
The widely followed US Nonfarm Payrolls (NFP) report showed the economy added 263,000 new jobs in November, beating consensus estimates for a reading of 200,000. In addition, the data for the previous month was also revised upwards to show an addition of 284,000 jobs compared to the 261,000 initially reported. Meanwhile, the unemployment rate held at 3.7% during the reported month, as expected.
Short dollar positions weigh on the price of gold
Other details in the report showed that Average Hourly Earnings grew by 0.6% in November and a rate of 5.1% year-on-year, suggesting a further increase in inflationary pressures. The data validates Federal Reserve Chairman Jerome Powell’s forecast that the top rate will be higher than expected, triggering a sharp rise in US Treasury yields. This, in turn, causes aggressive short-covering of the dollar and weighs heavily on the price of dollar-denominated gold.
Risk Aversion Momentum Does Not Support Safe Haven XAU/USD
Traders, for their part, seem unaffected by the sell-off in equity markets, which tends to drive flows into the safe-haven precious metal. However, the price of gold, for now, appears to have snapped a four-day winning streak, although it remains on track for strong weekly gains. Therefore, it will be prudent to wait for strong follow-up selling before confirming that XAU/USD has topped and positioning for a deeper corrective pullback.
Gold Price Technical Outlook
From a technical point of view, the failure to find acceptance above the all-important 200-day SMA and the subsequent drop could be seen as the first sign of bullish exhaustion. That being said, any further decline is likely to find some support near the $1,770 horizontal zone. A convincing break below should pave the way for a fall towards the next relevant support near the $1,755-$1,753 region.
On the other hand, the $1,800 signal seems to act as an immediate hurdle before the multi-month high, around the $1,804 area. It is closely followed by the August 2022 high around the $1,808 zone, above which the gold price could rally to the $1,820 resistance zone.
Key levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
