Gold Prices Hold Steady Ahead of Fed Chair Powell and the Latest US Jobs Report

Gold Price (XAU/USD), Chart and Analysis

• Fed Chair Powell’s testimony before lawmakers will be analyzed in detail.
• The latest US Jobs Report will guide the US dollar by the end of the week,
• US Treasury yields are falling, helping to support gold.

Find all market moving events and data releases in real-time DailyFX Calendar

Federal Reserve Chair Jerome Powell is due before the US Senate on Tuesday and Wednesday this week, and market participants will be watching his testimony closely for more clues as to how the central bank views the fight against inflation. Current market sentiment and pricing expects interest rates to reach 525-550 basis points by the end of the second quarter, up three-quarters of a percentage point from the current target rate of 450-475 basis points. Any deviation from this expected trajectory of rate hikes will increase US dollar volatility.

At the end of the week, the latest US Jobs Report (NFPs) will be released, a major market event. Last month’s report showed a sizeable increase in jobs created, 517,000 versus forecasts of 185,000 and 260,000 the previous month, taking the US unemployment rate down to 3.4%, its lowest level since May 1969. Annual revisions of survey data are latest Strong movement seen this month so this week’s report will be watched closely to see if the data returns to trend. The current market expectations assume 200,000 new jobs and an unchanged unemployment rate.

The recent upside in US Treasury yields has stalled over the past few days, allowing for bullish gold. The rate-sensitive UST 2-Year is now trading at a yield of 4.83%, down from a near 16-year high of 4.95% hit last week. A technical signal, a tombstone doji on the daily chart, is suggesting that short dated US Treasury yields may fall further.

2-year US Treasury yield

Gold is currently trading both sides of $1,850/oz, in the middle of two Fibonacci retracement levels at $1,828/oz. (38.2%) and $1,878/oz. (23.6%). As mentioned, lower US Treasury yields have given gold room to push higher over the past week and the future path of US interest rates will determine gold’s next move.

Gold price daily chart – March 6, 2023

All charts via TradingView

Retailers increase their short positions

Data from retail traders shows that 70.52% of traders are net long, with the ratio of long to short traders at 2.39 to 1. Trader’s net short is 11.34% higher than yesterday’s 28.96 % higher than last week.

We typically view crowd sentiment as contrarian and the fact that traders are net long suggests gold prices could fall further. Still, traders are less net long than yesterday and compared to last week. Recent mood changes warn that the current Gold price trend could soon reverse to the upside, although traders remain net-long.

What is your opinion gold – bullish or bearish?? You can let us know using the form at the bottom of this article or contact the author via Twitter @nickcawley1.