Gold Price Forecast: XAU/USD drops from daily highs but still above the $1700 figure

• Gold price barely slides 0.13%, weighed by higher US T-bond yields and a strong US dollar.
• Tensions between Europe and Russia threaten to worsen Europe’s energy crisis.
• US Calendar: Fed’s Mester, and Powell, to hit the stand on Wednesday and Thursday, respectively.

Gold price losses some of its brightness at the beginning of the week, down by 0.49%, in a thin liquidity trading day, with US markets, closed in the observance of Labour day. At the time of writing, the XAU/USD is trading at $1710 a troy ounce.

Monday’s market narrative includes tensions arising due to the energy crisis in Europe. Russia’s Gazprom halted natural gas flows through the Nord Stream 1 pipeline, citing a leak. Nevertheless, the headline crossed newswires after a G7 reunion put a lid on Russian oil prices.

In the meantime, the US Dollar Index, a measure of the buck’s value vs. a basket of six currencies, gains 0.20%, a headwind for the yellow metal, up at 109.826. The US 10-year benchmark note rate followed suit, gaining four bps at 3.231%.

Last week’s employment figures, released on Friday by the US Department of Labor, revealed that the US economy added 315K jobs in August, higher than forecasts to 298K. Although it was a positive reading, reinforcing the case for the Fed going 75 bps, the previous two months were downward revised by 107K.

Worth noting that the Unemployment Rate ticked up 3.7%, showing signs of softening. After data’s released, Federal Fund rates  (FFR) futures easied a tone. Markets expected that the US central bank would tighten 63.9 basis points instead of 68.

What to watch

The US economic docket will feature Fed speakers, led by Cleveland President Loretta Mester, on Wednesday and Jerome Powell’s speech on Thursday. On Thursday, Initial Jobless Claims for the week ending on September 2, alongside the S&P Global and ISM Services PMI, would be eyed by investors looking for clues of how the US economy fares.

Gold (XAU/USD) Key Technical Levels