Gold experienced selling pressure on Friday and hit a new daily low of $1,690.55 before moderately rebounding. Following the positive US labour market data, the benchmark 10-year US Treasury bond yield has increased by more than 1% on the day, which has a negative impact on XAU/USD.
The price of gold is bouncing around the 50% Fibonacci retracement (located from an August 10 high of $1,807.93 to a September low of $1,614.85) at $1,711.60 on a four-hour scale. After feeling barriers around $1,730.00, the precious metal has corrected to be close to the 20-period Exponential Moving Average (EMA) at approximately $1,709.00.
A weakening in the upward momentum is shown by the Relative Strength Index (RSI) (14) slipping from the bullish area of 60.00-80.00 to the 40.00-60.00 level.
The price of gold (XAU/USD) is fluctuating erratically in the early European session, trading in a constrained range between $1,709.35 and 1,713.42. The performance of the precious metal is underwhelming as attention is now being paid to the US Nonfarm Payrolls (NFP) report. At the time of publication, the yellow metal is trying to give an upward break, but the yields are defending the indications of an upward momentum loss, which might limit increases in gold prices. The barrier of 3.83% has been overcome by US Treasury 10-year yields once again.
The US NFP will serve as a major turning point in the future. 250k jobs were added to the US economy in September, as predicted. The US Automatic Figures Processing (ADP) Employment data, released on Wednesday, showed a 208k increase in payrolls. The US NFP may come in below expectations, according to this. In addition, it is noted that the unemployment rate remains unchanged at 3.7%.
In the meantime, the US dollar index (DXY) is consistently failing to sustain above the key level of 112.20 despite skyrocketing hawkish expectations for a fourth consecutive 75 basis points (bps) rate hike by the Federal Reserve (Fed). According to the CME Fed watch tool, the likelihood of a 75bps rate increase being announced has risen beyond 73%.
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