Gold Price Forecast: XAU/USD retreats further from two-week highs after US ISM Service PMI

• US Service sector data surpass expectations, no significant surprises.
• Treasury yields rebound from daily lows.
• XAU/USD retreats further from two-week highs, tests $1,840.

Gold prices weakened after the US data, however remained positive for the day and the week. XAU/USD fell to the $1,840/oz area, pulling back from the two-week high it hit earlier near $1,850.

US ISM Services PMI shows numbers above expectations

The ISM Services PMI came in at 55.1 in February, above the 54.5 expected and slightly under the 55.2 of January. The Prices Paid Index pulled back from 67.8 to 65.5, above the 64.5 of market consensus. Ahead of the NFP week, the Employment Index jumped to 54, against expectations of a slide to 49.8.

Previously, the final reading of the US S&P Global Services PMI showed a positive revision from 50.5 of the flash estimate to 50.6.

The US Dollar edged higher following the report, turned positive versus the Euro and the NZD and trimmed losses versus the Pound and the Yen. US yields rebounded from daily lows. The US 10-year yield rose from 3.97% to 4.02%. 

XAU/USD dropped to as low as $1,840/oz, still holding in positive ground for the day. Gold continues to back away from the two-week high it hit earlier on Friday at $1,849.

On a daily basis, Gold is still up for the day but off highs. An intraday support emerges around $1,837. A break lower would expose the $1,830 area. On the upside, the key barrier remains the $1,845/$1,850 range.

Technical levels