Gold Price Forecast: XAU/USD retreats to $2,007 after upbeat ADP report
- US ADP employment reports surpass expectations, focus turns to ISM Service PMI.
- Fed to raise rates by 25 basis points.
- XAU/USD drops after ADP but quickly rebounds.
Gold Price dropped from $2,015/oz to $2,007 after the release of the ADP Employment report that showed better-than-expected numbers and boosted the US Dollar for a few minutes. XAU/USD was back above $2,010 as Dollar’s momentum faded.
According to ADP, private payrolls increased by 296,000 in April, above the 148,000 of market consensus and higher than the revised 142,000 in March. However, it is unclear whether these numbers could anticipate what the Nonfarm Payrolls will say on Friday.
The focus now turns to ISM Service PMI due at 14:00 GMT and later to the FOMC statement at 18:00 GMT. Today’s employment data reinforced expectations of a 25 basis point rate hike from the Federal Reserve. It is seen as the last hike of the tightening cycle with the FOMC leaving the door open to more hikes if needed.
Despite the positive ADP numbers, US yields remain near weekly lows weighing on the US Dollar. At the same time, developments in the bond market continue to favor gold bulls. The FOMC meeting will likely trigger action in Treasuries, so volatility ahead for the yellow metal should be expected.
XAU/USD jumped on Tuesday, posting the highest daily close in two weeks, ending a consolidation phase. The immediate resistance is around the $2,030 area and then, the $2,050 zone. A slide under $1,995 should weaken the outlook while if it stays below $1,980, it would point to a deeper correction ahead.
Technical levels