Gold Extends Gains Above $2,000, Looks To Test Record Highs

Gold prices advanced sharply on Tuesday and extended gains into a third consecutive day on Wednesday, with the spot XAU/USD price approaching the $2,030 area after the U.S. reported another round of softer-than-expected employment figures ahead of the critical nonfarm payrolls report on Friday.

At the time of writing, the spot price XAU/USD is trading at $2,029, up 0.4% on the day and accumulating a 3% gain this week.

The ADP reported on Wednesday the U.S. private sector added 145,000 job positions in March, below the 200,000 expected. On Friday, the U.S. Bureau of Labor Statistics will report the nonfarm payrolls, which are expected to show the economy created 240,000 new jobs in March after February’s 311,000 increase.

Investors will follow the data closely as the Federal Reserve has reiterated they will remain data-dependent regarding following monetary policy decisions. Still, according to the CME FedWatch Tool, the chances of a no-hike are around 57% against a 43% of probability of another 25 bps increase. 

Against this backdrop, the U.S. Dollar has been retreating alongside Treasury yields, favoring the XAU/USD advance.

 
From a technical perspective, the XAU/USD maintains a strongly bullish outlook according to indicators on the daily chart, which are in positive territory, not yet giving signs of exhaustion. At the same price, the price hovers well above its main moving averages and moving closer to record highs struck in 2020 and 2022 at the $2,070-$2,075 region.

A break above this area would put the yellow metal in uncharted territory, with the projection of Fibonacci placing the next bullish target at the $2,195 zone. On the other hand, supports could be found at former resistance levels at $2,000 and $1,970 ahead of the 20-day SMA at $1,953.