Gold has failed to maintain its gains when it is close to the year-to-date (YTD) high of $2081. Two important central banks also raised interest rates, which raised bond yields. Additionally, US T-bond yields increased in response to a better-than-anticipated jobs report. Currently, XAU/USD is trading at $2015. This price is $1.68% less than the price at which it opened.
The Gold Surge Is Impaired by the US data and Bearish Sentiment
After the US banking turbulence dampened sentiment, US equities continued to gain some ground. The April US NonFarm Payrolls, which were released by the US Department of Labor, demonstrated that the labor market remained tight and that the economy added 253,000 jobs, considerably exceeding expectations of 180,000. The report also showed that salaries are rising, as seen by an increase in average hourly earnings of 0.5% MoM, surpassing the prediction of 0.3%, and a steady decline in the unemployment rate to 3.4% from 3.5%.
The US data release affected the price of gold, causing its price to drop from $2038 to around $2007. The price of gold even went as far as plunging below the $2000 mark. By doing this, the market hit a three-day low of $1,999. This was caused by short-term futures trading matching the Federal Reserve’s (Fed) interest rate reduction, as evidenced by the soaring rates on US Treasury bonds following the release of the NFP report.
Technical View of the Market
The Gold market reached a new all-time high before declining below the 61.8% Fibonacci retracement and coming up $2 short of the 78.6% Fibonacci barrier. Nevertheless, Gold recovered from its daily low of $1,999 and moved over the $2015 level of the 61.8% Fibonacci retracement. Notably, despite its downward movement, the Relative Strength Index (RSI) indicator is still in the bullish zone. The 3-day Rate of Change (RoC) changed from positive to neutral, possibly indicating that traders were taking profits before the weekend.
If the bullish trend must continue, XAU/USD bulls have to reclaim the 50% Fibonacci level, which is $2028.
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