Gold price attempts a modest recovery from multi-month low, limited upside potential

• Gold price recovers from a multi-month low and is supported by a combination of factors.
• Reduced bets for more Fed rate hikes in 2023 drag the US bond yields and the USD lower.
• The upside seems limited as traders might prefer to wait for the US NFP report on Friday.

Gold price (XAU/USD) gains some positive traction during the Asian session on Thursday and for now, seems to have snapped an eight-day losing streak. The US Treasury bond yields and the US Dollar (USD) pullback from the recent highs as investors now seek more clarity about the Federal Reserve's (Fed) next policy move, which, in turn, is seen lending support to the metal. A report published by Automatic Data Processing (ADP) on Wednesday shows signs of a cooling labor market in the United States (US). Adding to this, a survey from the Institute for Supply Management (ISM) indicated a moderation in the US services sector, giving the Fed some incentive to stop raising interest rates. This triggers a corrective decline in the US bond yields and prompts traders to lighten their USD bullish bets.

Any meaningful recovery for the Gold price, from a near seven-month low touched on Tuesday, still seems elusive. The US macro data is still consistent with expectations for solid economic growth in the third quarter. Moreover, the recent comments by several Fed officials backed the case for further policy tightening to bring inflation back to the 2% target. This keeps the door open for at least one more Fed rate hike in 2023, which, in turn, should act as a tailwind for the US bond yields and help limit the USD corrective decline. Hence, it will be prudent to wait for strong follow-through buying before confirming that the XAU/USD has formed a near-term bottom and positioning for further gains.

Traders might also prefer to wait on the sidelines ahead of the release of the closely-watched US monthly employment details on Friday. The popularly known NFP report will play a key role in influencing expectations about the Fed's future rate-hike path, which, in turn, will drive the USD demand in the near term and provide a fresh directional impetus to the Gold price. Heading into the key data risk, the US Weekly Initial Jobless Claims data will be examined for short-term opportunities later during the early North American session this Thursday.

Daily Digest Market Movers: Gold price draws support from retreating US bond yields, US Dollar

• Gold price attempts a recovery from its lowest level since March touched on Tuesday as US bond yields and the US Dollar pulled back from recent highs.
• The benchmark 10-year US Treasury yield retreats from its 16-year top and drags the US Dollar away from its highest level since November 2022 touched on Tuesday. 
• The US ADP report showed that private-sector employers added 89K jobs in September as compared to the previous month's upwardly revised reading of 180K.
• The US ISM Services PMI declined from 54.5 to 53.6 in September and forced investors to trim their bets for one more Fed rate hike move by the end of this year. 
• The Fed is still expected to stick to its hawkish stance and keep interest rates higher for longer, which should keep a lid on any meaningful upside for the XAU/USD. 
• The US NFP report will now be looked upon for cues about the Fed's future rate-hike path and should help determine the next leg of a directional move for the metal.

Technical Analysis: Gold price could attract fresh sellers at higher levels

The uptick on Thursday might still be categorized as a technical bounce from oversold conditions and runs the risk of fizzling out rather quickly. Hence, any subsequent move up is likely to confront stiff resistance near the $1,830-1,832 horizontal zone. A sustained strength beyond, however, might trigger a short-covering rally and lift the Gold price to the $1,850 resistance en route to the $1,858-1,860 barrier. On the flip side, the $1,815, or a multi-month low seems to have emerged as an immediate strong support. This is followed by the $1,800 round-figure mark, which if broken decisively will expose the next relevant support near the $1,770-1,760 region.