Happy Friday traders,

Today will be a busy day for both GOLD and the dollar, as the US economy is due to release NFP figures during the New York session. Previously, the prices for the precious metal, GOLD, fell to the lowest levels in nearly nine months on Thursday, pressured by the strength of the US dollar and the US Treasury yields, after Federal Reserve Chair Jerome Powell signaled no immediate move to address the rise in bond yields.
On Thursday, Powell said chances were that inflationary pressure could be seen in the time ahead, but it is unlikely to be enough to spur the central bank into raising interest rates. He expects that with the reopening of the economy, it will pick up, and the base effect will cause a rise in inflation that could create some upward pressure on prices.

Powell’s comments weighed on the market, as stocks started to fall and the US Treasury yields started to rise. This was due to the fact that many analysts and investors were waiting for him to address the recent hike in rates, along with some adjustment in the Fed’s asset purchasing program. The Fed is currently purchasing treasuries and mortgage-backed securities worth $ 120 billion a month. Despite expectations from economists and analysts, the Fed officials said that the Fed was far from taking any action to influence the long end of yields. The disappointment in the markets over Powell’s comments caused a spike in real yields and put additional pressure on the yellow metal prices.

Meanwhile, the US Dollar Index has also increased and peaked since December 2020, amid the rising Treasury yields, weighing further on the gold prices. On the data front, at 17:30 GMT, the Challenger Job Cuts for the year came in at -39.1%, against the previous 17.4%. At 18:30 GMT, the Revised Nonfarm Productivity came in, indicating a drop for the quarter to -4.2% against the expected -4.7%, putting pressure on the US dollar and capping further losses in GOLD.

The Revised Unit Labor Cost for the quarter also dropped to 6.0%, against the expected 6.7, which weighed on the US dollar and limited the downward momentum of the yellow metal. Last week, the Unemployment Claims declined to 745K, against the expected 758K, supporting the US dollar and adding further to the losses in the gold prices. In January, the Factory Orders rose to 2.6%, against the expected 2.2%, which helped the US dollar, and added more downward momentum to the gold prices on Thursday.
Meanwhile, on Thursday, the United States Senate cleared a key procedural hurdle and paved the way for the approval of President Joe Biden’s proposed $ 1.9 trillion coronavirus rescue package this weekend. According to Senate Majority Leader Chuck Schumer, the United States was facing a once-in-a-century crisis that has stolen millions of jobs from the economy and left millions of Americans struggling to make ends meet. It has also cost half a million American lives. Schumer said that the time has now come to move forward with bold, intensive relief for the American people. This also supported the US dollar on Thursday and weighed heavily on the GOLD prices.

Daily Technical Levels
Support               Resistance
1,697.10              1,736.80
1,678.40             1,757.80
1,657.40             1,776.50
Pivot Point:       1,718.10

For now, GOLD may find support at 1,673, and resistance at 1,706. The downward trendline and the series of bearish candles are keeping gold in a bearish mode. The RSI and MACD suggest that gold has entered the oversold zone, and it may bounce off until the 1,706 level before reporting another selling wave. Let’s consider staying bearish below 1,707, and wait for the US NFP figures that are due for release during the day. A selling bias continues to dominate the market. Good luck!