Gold Price Forecast: XAU/USD falls from 5-month high, below $1,800

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  • Strong US Nonfarm Payrolls data supports the Federal Reserve’s tightening policy.
  • US Treasury yields remain high, weighing on gold prices.
  • China eases testing measures while Beijing moves to new “optimized and adjusted measures”.
  • Gold Price Preview: Consolidate around $1,770-$1,800 as oscillators point lower.

the price of gold It eases back after hitting a multi-month high at $1,810, spurred on by strong US Treasury yields and risk aversion momentum. Factors such as the latest US employment report, which confirms the tightness of the labor market, caused US bond yields to rise. The relaxation of Covid-19 restrictions in China prevented the yellow metal from appreciating. At the time of writing, XAU/USD is trading at $1,776, down 1.30%.

Gold constrained by strong US jobs report

US stocks will open lower as equity futures show. Last week’s employment report, November Non-Farm Payrolls (NFP) rose by 263,000, above estimates of 200,000, while the Unemployment Rate, at 3.7%, was unchanged. Average Hourly Earnings rose 5.1%, versus 4.9% forecast, which would keep the US Federal Reserve (Fed) raising rates, albeit with increases of 50 basis points. In his speech on Wednesday, Fed Chairman Jerome Powell said that “the main wage measures that we look at, I would say is one and a half to two percent above that (which is consistent with two percent inflation). cent in time).

US yields rise on Monday, halting Gold’s rally

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Apart from this, the 10-year US Treasury yield is rising nine basis points, from 3.502% to 3.597%, while US real yields, which reflect nominal yield interest minus inflation expectations, they stand at 1.16% as of Friday, a headwind for gold. XAU/USD continues to weigh, down more than 1% at the open on Wall Street.

China makes progress in easing Covid-19 restrictions

Over the weekend, Chinese authorities are beginning to relax testing requirements in major cities as Beijing abandons zero-tolerance Covid-19 measures amid rising reports of the virus spread. Chinese Vice Premier Sun Chunlan declared last week that the control of the pandemic in the country had entered a new phase. Given the evolution of the challenges and tasks, the government will take small coherent steps to optimize the Covid measures.

Gold Price Preview: XAU/USD Technical Outlook

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The daily chart for XAU/USD suggests that Gold continues to have a bullish bias, but could consolidate soon. Oscillators such as the Relative Strength Index (RSI) and the Rate of Change (RoC) show negative divergence with price action, compounding the slide below $1,800. However, if the XAU/USD price sustains above the EMAs, that could keep the unprofitable metals uptrend intact.

Therefore, the first resistance for XAU/USD would be the psychological $1,800 level, followed by the June 17 high at $1,857.20, followed by the June 13 daily high at $1,879.45. On the other hand, the first support for the XAU/USD would be $1,778.68, followed by the December low at $1,767.70 and the 200 day EMA at $1,759.92.

Source: Fx Street

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