Gold falls as US T-bond yields climbed

US equities reflect a risk-on impulse in the financial markets. A tranche of data from the United States (US), namely Factory Orders for January, dropped less than the -1.8% MoM estimated, at a -1.6% fall. The report from the US Commerce Department showed improved shipments and manufactured goods, snapping two straight months of declines.

In the meantime, the US Dollar (USD) failed to gain traction following the report, as shown by the US Dollar Index (DXY) falling 0.28%, at 104.232. Contrarily, US Treasury bond yields, mainly the 10-year, is up one bps at 3.967%, a headwind for Gold prices.

XAU/USD’s price would likely remain volatile as market participants prepared for the US Federal Reserve (Fed) Chairman Jerome Powell’s speech at the US Congress on March 7 and 8. Market participants estimate a hawkish stance, echoing some of the messages spread by his colleagues. Investors expect that Powell would reiterate the Fed’s commitment to curb inflation and emphasize the need to go higher for longer.

In addition to Jerome Powell’s appearance at the congress, XAU/USD traders are eyeing US employment data. The prior month’s US Nonfarm Payrolls report crushed estimates of 200K, creating more than 500K jobs in the economy. For February, market analysts expect an increase of just 200K compared to last month’s data. Upbeat data would send XAU/USD extending its losses, as further labor market tightening would warrant higher rates in the US economy, so it could be slowed down to curb inflation.

In the meantime, traders anticipate that the US Federal Reserve will hike 25 bps at the upcoming March meeting. However, recent Federal Reserve’s hawkish commentary, and US data, had put a 50 bps increase in the table, as two officials expressed a more hawkish stance than expected.