Gold prices paused their three-day rally as investors took profits ahead of the highly anticipated US Nonfarm Payrolls report. Additionally, the increase in US Treasury bond yields diminished the appeal of the non-yielding metal. At the time of writing, gold (XAU/USD) was trading at $2,918, virtually unchanged.
The yellow metal consolidated above the $2,900 level, capped by a rise in the US 10-year Treasury bond yield to a one-week high, before retracing to 4.286%.
Market Uncertainty Intensifies
Financial markets are grappling with uncertainty, exacerbated by controversial trade policies proposed by US President Donald Trump. Tariffs imposed on both US allies and adversaries sparked retaliatory actions from countries such as Canada and China. Meanwhile, Mexico received a temporary reprieve from tariffs, with a one-month delay granted until April 2 following discussions between Trump and Mexico’s President Claudia Sheinbaum on issues related to fentanyl and illegal migration.
Mixed US Economic Data
US economic data showed a mixed picture. The Challenger jobs report revealed a sharp increase in layoffs, reaching levels not seen since the last two recessions. However, the number of Americans filing for unemployment benefits fell below projections, alleviating some recession concerns fueled by the Challenger report.
Following these data points, the Atlanta Fed’s GDPNow model revised its Q1 2025 GDP forecast to a contraction of 2.4%, slightly improved from the previous estimate of -2.8%.
Focus Turns to February Nonfarm Payrolls
Gold traders are now looking ahead to the release of February’s Nonfarm Payrolls report on Friday, with analysts expecting the addition of 160,000 jobs to the workforce.
Market Movers and Data Highlights
US real yields, as measured by the 10-year Treasury Inflation-Protected Securities (TIPS) yield, remain flat at 1.946%, posing a headwind for gold prices, which typically move inversely to real yields.
Initial Jobless Claims for the week ending March 1 rose to 221,000, below the 235,000 forecast and the previous week’s 242,000.
The Challenger report for February saw a dramatic surge in job cuts, rising from 49,800 to 172,000, largely due to actions related to DOGE. The federal government accounted for a significant portion, with 62,242 layoffs.
Money market traders are pricing in 74 basis points of easing in 2025, up from 72 basis points on Wednesday, according to Prime Market Terminal data.
Gold Technical Outlook
Gold prices have held firm above $2,900 for the second consecutive day, forming two Doji candles, suggesting indecision between buyers and sellers. Despite some loss of momentum, as indicated by the Relative Strength Index (RSI), the RSI remains in bullish territory.
The path of least resistance for gold appears skewed to the upside. Key resistance levels are seen at $2,950, followed by the all-time high of $2,954. A break above $2,954 could open the door to $3,000.
Conversely, a daily close below $2,900 could risk reversing the uptrend and prompt a “healthy” pullback. In that case, gold’s first support would be at the February 28 low of $2,832, followed by $2,800.
Conclusion
In summary, gold prices have taken a breather after a strong rally, with investors booking profits and rising US Treasury yields diminishing the appeal of the precious metal. As markets await the release of key economic data, including the February Nonfarm Payrolls report, uncertainty remains high, particularly with the ongoing trade tensions and mixed economic indicators. Gold’s technical outlook suggests that it may continue its upward trajectory if it maintains support above $2,900, though any significant decline could trigger a pullback. Traders will need to closely monitor upcoming data, as it could significantly impact the direction of both gold prices and broader financial markets in the near term.