• Gold price remains above the psychological level of $1,900 in the probable end of its bearish correction.
  • Investors are keen on the US job data scheduled for Thursday and Friday.
  • Declining Treasury yields and remarks from various Fed officials have supported gold prices.  

US bond yields

Low US bond yields usually exert pressure on the US dollar, which is a bullish catalyst for gold price. After hitting an intraday high of 1,64 on Tuesday, the benchmark 10-year US bond yields are down by 1.27% at 1.58. The 5 and 30-year Treasury yields are also down by 1.76% and 1.00%, respectively. Notably, the decline in the Treasury yields has offered support to gold prices.  

Fed officials’ speeches 

The other event that continues to impact the gold price in the current week is the Fed officials’ speeches. The largely anticipated speech is that of Fed Chair Jerome Powell. The Fed official is expected to speak on Friday, a day after speeches from Atlanta’s Fed President Raphael Bostic and Fed Vice Chair of Supervision, Randal Quarles. 

Remarks by key Federal Reserve officials often impact the US dollar. This is founded on their mandate to control interest rates and maintain a healthy economy. Based on the correlation between the greenback and precious metals, investors in gold tend to watch such events closely. A hawkish tone would offer support to the US dollar while curbing the gains of gold price.  

In the recent past, fed officials, including the aforementioned, have maintained that the expected inflation is transitory. They have consistently downplayed inflation fears. This is especially after the higher-than-expected US CPI data that heightened concerns over the economy overheating. 

However, last week, Raphael Quarles and Richard Clarida noted that the Fed might need to start discussions on tapering asset purchases in coming meetings. According to the two officials, the move would largely depend on the incoming economic data. On Tuesday, Fed Governor Lael Brainard held a similar tone in his speech.

US employment data 

For the remainder of the week, gold prices will also be reacting to the US job data scheduled for Thursday and Friday. To begin with, the ADP national employment report is scheduled for Thursday afternoon. Analysts expect a reading of 650,000, which would be lower than April’s 742,000. A lower-than-expected figure will be bullish for gold price. 

Investors will also be eyeing the initial jobless claims data, set for release on Thursday. Since the beginning of May, the figures have been lower than expected. In the previous release, there were 406,000 new jobless claims. This week, economists expect the figure to decline to 390,000. On Friday, the focus will be on the unemployment rate and nonfarm payroll data. 

Gold price technical outlook

The gold price is trading above the psychological level of $1,900 after moving past that crucial mark earlier in the day. At the time of writing, it was down by 0.29% at $1,905.75. On a daily chart, it remains above the 25 and 50-day exponential moving averages. Besides, it is above the ascending trendline highlighted in black.

The key question in the minds of gold traders and investors is whether the prolonged correction is finally over. After hitting its all-time high in August 2020 at 2075.50, the gold price has been under pressure. However, since the beginning of this year’s second quarter, the precious metal has been strengthening amid a weakening US dollar and inflation concerns. Since the end of March, it has surged by about 13.39%.    

In the ensuing sessions, I expect the gold price to remain on an uptrend for as long as it moves above the ascending trendline. The key resistance levels to watch out for are last week’s high of 1917.54 and the higher 1,960.42. The latter level is the year’s highest level, which the precious metal hit in January. On the lower end, the gold price is likely to find support at 1870.15 and 1810.35, which are both May’s lows and previous resistance-turn-support levels. 

XAU/USD chart