Image Source: Pixabay

• The XAU/USD currency cross slumped on Friday, losing over 2.5% on a weekly basis as traders scaled back Fed rate cut bets and risk appetite improved.
• April NFP numbers beat estimates. Unemployment remained steady at 4.2%, which curbed aggressive Fed easing expectations.
• China said the US was open to trade talks, which boosted sentiment and placed further pressure on gold.

The price of gold edged down over 0.35% on Friday, as it appeared set to end the week with losses of over 2.50%. An improvement in risk appetite due to easing trade tensions, along with a strong labor market report in the United States, prompted investors to book profits ahead of the weekend. At the time of writing, the XAU/USD currency cross was seen trading at around $3,226 after retreating from a daily high of $3,269.

Overnight news revealed that China’s commerce ministry said the US was willing to begin trade talks and reassured Washington that Beijing’s door would be open for discussion.

Bullion prices extended their losses on the headline that Nonfarm Payrolls in April crushed estimates, as the Unemployment Rate held firm compared to March numbers. The XAU/USD duo's drop towards the day’s low of $3,222 was precipitated by traders reducing their bets that the Federal Reserve would cut rates three times instead of four.

US Treasury yields rose sharply, but the US Dollar Index (DXY), which tracks the greenback's performance against a basket of six other currencies, tumbled 0.20% to the 99.98 mark.

After the data release, investors rushed to price in 78 basis points of Fed rate cuts, as revealed by data from Prime Market Terminal.

(Click on image to enlarge)

Image Source: Prime Market Terminal

Next week, gold traders will likely be eyeing the release of the Federal Reserve’s monetary policy meeting, during which the US central bank is expected to keep rates on hold.

Market Movers: Gold Price Edged Lower while US Treasury Yields Jumped

• Recently released data pushed US bond prices down, increasing US Treasury yields. The US 10-year Treasury note yield soared nine basis points, up to 4.312%. At the same time, US real yields rallied nine and a half bps to 2.062%, as shown by the US 10-year Treasury Inflation-Protected Securities yields.
• US Nonfarm Payrolls increased by 177,000 in April, below the downwardly-revised number of 185,000 in March but exceeding estimates of 130,000. Earlier in the week, a dismal ADP National Employment Change report suggested that companies were hiring fewer people than the NFP revealed.
• The US Unemployment Rate remained unchanged at 4.2%, which aligned with forecasts and might prevent the Federal Reserve from easing its policy.

XAU/USD Technical Outlook: Gold Price Remained Bullish but Seemed Poised To Drop Below 3,200

The gold price correction extended below the $3,250 mark after traders tried to reclaim the $3,270 level but failed. The Relative Strength Index (RSI) showed that sellers were gathering steam. A drop below the $3,200 figure may be likely.

In that outcome, the next support would be the April 3 high, which turned to support, at the $3,167 level. Once surpassed, the next stop would be the 50-day Simple Moving Average (SMA), at the $3,080 mark. Conversely, if buyers could lift gold prices above the $3,300 threshold, such a move would clear the path to challenge the $3,350 level, followed by $3,400.

(Click on image to enlarge) 

More By This Author: