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  • Despite daily gains, the XAU/USD is set to close a third consecutive week of losses, near the $1,920 area.
  • Declining yields amid soft PCE figures weakened the USD favouring Gold prices.

On Friday, the gold spot XAU/USD traded with nearly 0.50% gains, jumping near the $1,920 area. Soft Personal Consumer Expenditures from the US fueled a decline in US yields and, thereby, a weaker US Dollar, which boosted the yellow metal. Moreover, the Gold’s short-term trajectory will be determined by bets on the next Federal Reserve (Fed) decision, which will have an impact with crucial labour market data to be released next week.

US reported soft PCE figures. Eyes on labour market data

After the US Bureau of Economic Analysis showed the Core Personal Consumption Expenditures (PCE), the Federal Reserve’s preferred measure of inflation, unexpectedly decelerated to 4.6% YoY in May. As attention now shifts to labour market data, Investors are trying to decipher the next moves by the Fed after Chair Powell commented that Federal Open Market Committee (FOMC) foresee additional hikes, driven by a hot labour market.

In that sense, Non-farm payrolls (NFP) are expected to decline to 200K in June. In addition, Average Hourly Earnings are foreseeing remaining steady at 4.3% YoY and the Unemployment rate at 3.7%.

As for now, markets are discounting 25 basis points (bps) hike in the next Fed meeting in July but disagree when the second hike Jerome Powell hinted will come. Is worth noticing that non-yielding yellow metals tend to be negatively correlated with interest rates so hawkish bets on the Fed would apply further selling pressure.

XAU/USD levels to watch

The technical outlook, according to the daily chart, for the XAU/USD remains neutral to bearish for the short term. The Relative Strength Index (RSI) holds below its midline but with a positive slope, while the Moving Average Convergence Divergence (MACD) prints rising red bars.

Support levels to watch: $1,905, $1,900, $1,890.
Resistances levels to watch: $1,930, $1,938 (20-day Simple Moving Average), $1,945 (100-day Simple Moving Average)

 

XAU/USD Daily chart

 

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