Gold price continues winning spell ahead of US NFP

• Gold price prints a fresh all-time high of around $2,170 amid multiple tailwinds.
• US Treasury yields plunge as Fed Powell delivers a slight dovish guidance on interest rates.
• The US Dollar, Gold next moves will be guided by the US NFP data. 

Gold price (XAU/USD) is set to deliver a bullish closing for a third straight week as geopolitical tensions continue to run high and the United States Treasury yields fall amid growing expectations that the Federal Reserve (Fed) is close to lowering interest rates.  The precious metal rallies to a fresh all-time high around $2,170 as yields on 10-year US bonds fell to 4.07% after Federal Reserve Chair Jerome Powell indicated the central bank is close to gaining evidence for inflation returning sustainably to the 2% target. 

In his two-day testimony before Congress, Jerome Powell said: "We are waiting to become more confident that inflation is moving sustainably down to 2%. When we do get that confidence, and we’re not far from it, it will be appropriate to begin to dial back the level of restriction so that we don’t drive the economy into recession.”

The precious metal exhibits a firm footing ahead of the US Nonfarm Payrolls (NFP) data for February, which will be published at 13:30 GMT. Hiring figures in January were robust, and a similar performance in February month along with sticky wage growth could cause the Fed to observe incoming data for some months before considering a rate-cut move. This scenario would provide a relief to the US Dollar, which is facing a sharp sell-off since last week, and weigh on Gold. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, has dropped to 102.70.

Meanwhile, the death of three civilians on a merchant ship flowing from the Red Sea by Iran-backed-Houthis has increased the risk of escalating geopolitical tensions in the region. 

Daily digest market movers: Gold price strengthens at the cost of US yields

• Gold price prints a fresh all-time high near $2,170 as Federal Reserve Chair Jerome Powell sounded slightly dovish in his two-day testimony before Congress. Powell said policymakers are not far from gaining confidence that inflation will return to the 2% target. He recognized the need to dial back the restrictive monetary policy stance to prevent the economy from falling into a recession.
• The rally in the Gold price indicates that the slight dovish commentary from Fed Powell has built confidence among investors that rate cuts will be announced sooner. The expectations for the Fed reducing interest rates in the June policy meeting remain firm. The Fed is expected to keep interest rates unchanged in the range of 5.25%-5.5% in the March and May policy meetings.
• In today’s session, the strength of the Gold price will be tested by the US NFP data for February. It is anticipated that the United States employers have recruited 200K jobs, lower than the robust hiring of 353K in January. The Unemployment Rate is anticipated to remain unchanged at 3.7%. 
• Apart from that, February's Average Hourly Earnings data will be of utmost importance. Economists expect that monthly wage growth to have halved to 0.3% from 0.6% in January. The annual wage growth is forecasted to have grown by 4.4%, slightly decelerating from the prior reading of 4.5%. 
• Higher wage growth could slow the progress in inflation declining towards 2%, which could negatively influence market expectations for Fed rate cuts in June. If this happens, the opportunity cost of holding an investment in non-yielding assets, such as Gold, will increase, weighing on Gold price.

Technical Analysis: Gold price turns overbought around $2,170

Gold price carry-forwards its winning streak for an eighth trading session on Friday. The precious metal has refreshed its all-time highs at $2,172 after breaking above the horizontal resistance line plotted from December 4 high near $2,145.

The Gold price is trading in unchartered territory and is expected to remain broadly bullish. However, a corrective move in the asset cannot be ruled out as momentum oscillators have reached the overbought territory. The 14-period Relative Strength Index (RSI) has reached 83.00, well above the 70.00 threshold, which signals overbought levels and points to some correction ahead.

On the downside, December 4 high near $2,145 and December 28 high at $2,088 will act as major support levels.