Gold Price retreats towards $1,850 on sluggish market ahead of US NFP

• Gold Price fades bullish momentum around fresh monthly high.
• Indecision over the Fed’s next moves, mixed clues over US jobs report trouble traders during pre-NFP trading lull.
• Downbeat prints of employment, ISM data could propel XAUUSD, Biden’s speech eyed as well.

Gold Price fails to extend a two-day uptrend, despite refreshing the monthly high, amid the market’s anxiety ahead of the key US data/events during early Friday. That said, the quote remains pressured around the intraday low surrounding $1,870 even if the bulls renewed a multi-day high earlier in Asia. In doing so, the precious metal consolidates recent gains amid sluggish markets and mixed clues over the US employment report, as well as relating to the US Federal Reserve’s (Fed) next moves.

Dollar, yields dribble amid market’s indecision

Although the precious metal remains lackluster, it does maintain an inverse relationship with the US dollar and yields as traders await US Nonfarm Payrolls (NFP) and ISM Services PMI for May. That said, US Dollar Index (DXY) stabilizes around 101.75-80, having dropped the most in two weeks, while tracking the sluggish US 10-year Treasury yields surrounding 2.91% by the press time.

Also read: Gold Price Forecast: Will XAUUSD extend the upside break on US NFP?

Softer early signals for NFP keep gold price bouyed

Downbeat early signals for today’s US Nonfarm Payrolls (NFP), expected 325K versus 428K prior, hint at the XAUUSD’s further upside as a softer figure could stop the Fed from faster/heavier rate hikes. On Thursday, the US ADP Employment Change eased to 128K for May, versus 300K forecasts and a downwardly revised 202K previous reading. The Weekly US Initial Jobless Claims, on the other hand, dropped to 200K compared to 210K anticipated and 211K prior. Further, Nonfarm Productivity and Unit Labor Costs both improved in Q1, to -7.3% and 12.6% respectively, compared to -7.5% and 11.6% figures for market consensus.

Fedspeak weighs on prices

US Fed policymakers keep suggesting the faster path to monetary policy normalization as they fear faster inflation. On Thursday, Federal Reserve Vice-Chair Lael Brainard and Cleveland Fed President Loretta Mester repeated the statements suggesting higher odds favoring the Fed’s aggression in rate hikes.

US Federal Reserve

Additionally weighing on the Gold Price are the risk-negative headlines concerning China, due to the dragon nation’s status as one of the world’s largest bullion consumers. Deputy US Trade Representative (USTR) Sarah Bianchi seemed to have offered the latest challenge to market sentiment, as well as to the bright metal, as the diplomat said, “USTR is seeking a 'strategic realignment' with China, tariff structure that 'makes sense'.” The mood was challenged by statements like, “‘All options are on the table’ regarding tariff decisions on Chinese imports.” USTR Bianchi also suggested faster trade talks with Taiwan which may not be liked by China and hence challenge the bullion prices. On the same line were statements from China’s Foreign Ministry spokesman Zhao Lijian who conveyed dislike for the US’ law banning imports from Xinjiang.

It should be noted that US President Joe Biden is up for a speech just after the NFP release and may convey the employment scenario for the US. Biden has been optimistic of late and hence could try to print a rosy picture of the jobs report, despite the outcome. Even so, any surprise downbeat comments may exert additional downside pressure on Gold Price.

Gold Price technical outlook

Gold Price fades upside momentum after refreshing monthly high as overbought RSI challenges the metal’s upside break of $1,867-68 hurdle, now immediate support comprising the 200-SMA and 38.2% Fibonacci retracement of April-May downturn.

The pullback moves, however, remain elusive as the previous resistance line from late April acts as an extra filter to the south around $1,855.

In a case where XAUUSD drops below $1,855 resistance-turned-support, the odds of witnessing further declines towards the weekly low near $1,828 can’t be ruled out.

Alternatively, a convergence of the previous support line from mid-May and 50% Fibonacci retracement level, around $1,893, appears a tough nut to crack for short metal buyers.

Following that, the late April swing high surrounding $1,920 could lure the gold buyers.

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