Gold’s three-day rally came to an abrupt halt as investors cashed in profits ahead of the highly anticipated US Nonfarm Payrolls report. The precious metal’s appeal was also weighed down by rising US Treasury bond yields, making the non-yielding asset less attractive. As of now, XAU/USD stands at $2,918, showing little movement.
The yellow metal had briefly held above $2,900, but the climb was capped by a surge in US 10-year Treasury yields, which reached a one-week high before easing to 4.286%.
Markets are grappling with uncertainty, exacerbated by controversial trade policies introduced by US President Donald Trump. His tariffs on both allies and adversaries prompted retaliatory measures from countries like Canada and China. Meanwhile, Mexico was granted a one-month delay in tariffs, extending until April 2, after discussions between Trump and Mexican President Claudia Sheinbaum on issues related to fentanyl and illegal migration.
Economic data in the US presented a mixed picture on Thursday. The Challenger jobs report revealed a sharp rise in layoffs, reaching levels not seen since the last two recessions. However, the number of Americans filing for unemployment benefits fell below expectations, helping to ease recession concerns that had been stoked by the Challenger report.
The Atlanta Fed’s GDPNow Model now estimates Q1 2025 GDP to contract by 2.4%, an improvement from Wednesday’s projection of -2.8%.
Attention now shifts to Friday’s Nonfarm Payrolls report, with analysts predicting an addition of 160,000 jobs in February.
Market Update: Mixed Economic Data and Flat US Real Yields
Gold traders are also watching US real yields, as measured by the 10-year Treasury Inflation-Protected Securities (TIPS) yield, which remains flat at 1.946%, acting as a headwind for XAU/USD prices. US Initial Jobless Claims for the week ending March 1 rose to 221,000, though this was better than the expected 235,000 and the previous week’s 242,000.
The Challenger Job Cuts data for February saw a sharp increase from 49,800 to 172,000, largely driven by government-related actions, with the federal government responsible for 62,242 of the layoffs.
Money market traders have adjusted expectations, now pricing in 74 basis points of easing in 2025, up from 72 bps the day before.
Gold Technical Outlook: Stability Above $2,900
Gold prices continue to consolidate, having posted two Doji candles, signaling indecision in the market. The Relative Strength Index (RSI) suggests that bullish momentum is weakening, but it remains in positive territory.
The path of least resistance still leans toward the upside, with immediate resistance at $2,950, followed by the all-time high of $2,954. A breakout above that level could pave the way for a move toward $3,000.
On the downside, a daily close below $2,900 could signal the end of the uptrend and open the door for a pullback, with support levels at the February 28 low of $2,832 and the $2,800 mark.
