Gold price declines despite dollar’s weakness

The gold price retreats on Thursday and is trading at $1867.54 at the time of writing. The positive US economic data earlier on the day triggered the precious metal’s jump to fresh daily high at $1890.21. US Initial Jobless Claims underpinned XAU/USD, though the metal retreated those gains

Unemployment claims rose above estimates, indicating a slight shift in the US labor market. Initial Jobless Claims for the week ending February 4 increased by 195K, above forecasts of 190K, as reported by the Department of Labour. High-tech companies had announced a series of layoffs, the US economy added more than 500K in January, as revealed by the last US Nonfarm Payrolls report.

Gold prices look pressured on Thursday, even though the US dollar is recording losses of 0.48%. US Treasury bond yields extended their losses from around weekly highs at 3.692% to 3.592%, a tailwind for gold. Despite all these developments, the Gold Index is trading below its opening price, exchanging hands at 1867.54, per ounce.

The US 10-year Treasury bond yield stages a recovery after dipping to its daily low of 3.575% and climbing to 3.609%. US equities continue to rise throughout the US session. XAU/USD has failed to gain traction after hitting a daily high of $1890.21, shy of the 20-day Exponential Moving Average (EMA) at $1893.07.


Fed officials hinted that more rate hikes are needed as the US central bank battles to curb high inflation. Fed’s John Williams said, “seems a very reasonable view of what we’ll need to do this year to get the supply and demand imbalances down.” Additionally, Fed’s Lisa D. Cook said that moving in smaller rate increases “is appropriate” as the central bank asses the effects of cumulative tightening. Later, Minnesota’s Fed President Neil Kashkari added that he believes the Federal Funds Rate would need to go as high as 5.4%, according to his projections.

The US Dollar Index edges down by 0.31%, at 103.147, but gold prices failed to benefit from the retreating dollar.

Technically; the Gold Index is pressured, eyeing to extend its losses below Monday’s low of $1860.44, which is also the weekly low. An extension below would set gold to test the 50-day Exponential Moving Average (EMA) around $1856.55. Once broken, XAU/USD’s bearish continuation would extend to the December 27 daily high-turned-support at $1833.29, followed by the 100-day EMA at $1816.20.

As an alternate scenario, XAU/USD’s resistance lies at the 20-day EMA at 1892.41, ahead of the psychological $1900 mark.