The price of gold (XAU/USD) has staged a recovery from multi-day lows near $2030 per ounce and is currently hovering around $2,042 during the early Asian session on Thursday. The precious metal faced headwinds from a stronger US Dollar (USD) and elevated US Treasury bond yields.
The US Dollar Index (DXY), representing the USD against a weighted basket of currencies, surged to its highest level in three weeks, reaching around 102.42. Concurrently, Treasury yields saw an uptick, with the 10-year yield standing at 3.92%.
The FOMC meeting minutes, released on Wednesday, did not adopt a dovish tone, contrasting with the press conference held after the December meeting. The lack of dovish signals contributed to a broader strengthening of the US Dollar. Fed participants emphasized a cautious and data-driven approach, indicating a commitment to maintaining a restrictive policy for some time.
Despite the US Institute for Supply Management (ISM) reporting a further contraction in US Manufacturing PMI in December, there were improvements in production and factory employment. The Manufacturing PMI rose to 47.4 from the previous reading of 46.7, surpassing the market consensus of 47.1.
Looking ahead, Thursday’s economic calendar includes the release of the US ADP Employment Change and weekly Initial Jobless Claims. Traders are expected to gather more clues from US employment data on Friday, which includes Nonfarm Payrolls, Unemployment Rate, and Average Hourly Earnings. These releases will likely play a significant role in shaping market sentiment around gold prices in the near term.
