Gold prices surged by 1.18% due to mixed US economic data and falling Treasury yields, reaching a level of $2,353 on Wednesday. This increase comes after a softer-than-expected US jobs report led to a drop in the US 10-year Treasury yield to its lowest point since April. Despite the rise in the US Dollar Index by 0.22% to 104.7, it was unable to stop the advance of the price of gold.
The Institute for Supply Management (ISM) reported growth in the US service sector, leading to an increase in both the dollar and gold prices. Meanwhile, investors began factoring in more than a 25-basis-point rate cut by the end of 2024, which caused US Treasury yields to continue falling. There was a 37-basis-point easing projection based on data from the Chicago Board of Trade (CBOT).
Commodity prices stabilized after a significant drop earlier in the week, with the gold price receiving an additional boost from upbeat Caixin PMI data from China. This, combined with falling US Treasury bond yields and a weakening US Dollar, contributed to the gold price’s increase. The US 10-year Treasury bond yield dropped by eleven basis points to 4.392%.
Despite a strong US Dollar, the gold price consolidated within a range of $2,320 to $2,360. The Relative Strength Index (RSI) indicated that buyers are in control, suggesting a possible continuation of the bullish trend. If the price of gold surpasses $2,360, the next resistance levels are $2,400 and $2,450. However, if XAU/USD falls below the 50-day Simple Moving Average of $2,337, it could reach lows of $2,303 and $2,277.
Looking ahead, market watchers are keeping an eye on key economic indicators such as the US ISM Services PMI, ADP Employment Change, and the US Core Personal Consumption Expenditure Price Index. The possibility of rate cuts in September is currently estimated at 57.4% according to the CME FedWatch Tool. Key reports to be released include Initial Jobless Claims and Nonfarm Payrolls data for May on Thursday and Friday respectively.
