Gold price attracts sellers for the third straight day, though it lacks follow-through.
Friday’s US NFP report tempered Fed rate cut bets and weighed on the XAU/USD.
A weaker USD, US fiscal concerns, and geopolitical risks support the commodity.
Gold price (XAU/USD) is extending last week's retracement slide from a nearly one-month peak – levels just above the $3,400 mark and losing ground for the third consecutive day on Monday. The intraday descent drags the commodity to sub-$3,300 levels, or a one-week low during the Asian session, though it lacks follow-through amid a broadly weaker US Dollar (USD).
Meanwhile, investors remain on edge ahead of the key US-China trade talks later today in London. This, along with persistent geopolitical risks, assists the safe-haven Gold price to recover a major part of the early lost ground. Any further upside for the non-yielding yellow metal, however, seems limited amid reduced bets for more rate cuts by the Federal Reserve (Fed) this year.
Daily Digest Market Movers: Gold price bears seem non-committed amid a combination of diverging forces
The closely-watched Nonfarm Payrolls report published by the US Bureau of Labor Statistics (BLS) on Friday showed that the economy added 139K new jobs in May compared to the previous month's downwardly revised reading of 147K. This, however, was still higher than the market expectation for 130K.
Additional details revealed that the Unemployment Rate held steady at 4.2%, as anticipated, while Average Hourly Earnings remained unchanged at 3.9%, beating consensus estimates of 3.7%. The data prompted market participants to trim bets that the Federal Reserve will cut interest rates this year.
The outlook keeps US Treasury bond yields across maturities elevated and exerts some downward pressure on the Gold price at the start of a new week. However, a combination of factors holds back the XAU/USD bears from placing aggressive bets and helps limit any further intraday downfall.
Following the report, US President Donald Trump intensified his pressure campaign against Federal Reserve Chair Jerome Powell and urged him to cut rates by a full percentage point. Moreover, traders are still pricing in a greater possibility that the Fed will lower borrowing costs in September.
This, along with concerns about the US government's financial health, fails to assist the US Dollar to capitalize on the post-NFP gains. Furthermore, an escalation in the Russia-Ukraine conflict, amid stalled peace talks, keeps the geopolitical risks in play and supports the safe-haven commodity.
Top US and Chinese officials will meet in London on Monday for negotiations aimed at defusing the high-stakes trade dispute between the world's two largest economies. US President Donald Trump said last week that a call with the Chinese leader Xi Jinping resulted in a very positive conclusion.
Gold price bears need to wait for acceptance below the $3,300 mark before positioning for deeper losses
From a technical perspective, the Gold price showed an intraday resilience below the $3,300 mark and the 200-period Simple Moving Average (SMA) on the 4-hour chart. This makes it prudent to wait for acceptance below the said handle before positioning for deeper losses. The XAU/USD pair might then accelerate the slide below the $3,283-3,282 region, towards the $3,246-3,245 area (May 29 swing low) en route to the $3,200 neighborhood.
On the flip side, any meaningful move higher is likely to confront a stiff barrier and attract fresh sellers near the $3.352-3,353 horizontal zone. This, in turn, should cap the Gold price near the $3,377-3,378 resistance. A sustained strength beyond the latter, however, could trigger a short-covering rally and allow the XAU/USD bulls to make a fresh attempt to conquer the $3,400 round figure. The momentum could extend further towards the $3,425-3,430 region en route to the all-time top, around the $3,500 psychological mark touched in April.
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