XAUUSD: Important data will be released next week

On Friday (March 10th), the US Bureau of Labor Statistics released data showing that the US added 311,000 non-farm jobs in February, lower than the revised previous value of 504,000, but much higher than the expected 205,000. The unemployment rate in February rose to 3.6%, higher than the expected and previous value of 3.4%. The average hourly earnings in February increased by 4.62% YoY, lower than the expected 4.7% but higher than the previous value of 4.40%.

Although the February non-farm job growth was much higher than expected, the rising unemployment rate and slowing wage growth have tempered the market's expectations of a 50 basis point rate hike at the March Fed meeting. Meanwhile, the market's pricing of terminal Fed rates has dropped sharply, and expectations of a rate cut by the end of the year have resurfaced.

As the market cools on the Fed's rate hike expectations, the US dollar index fell 0.61% to 104.64 on Friday, 2-year and 10-year US Treasury yields plummeted by 28 basis points to 4.59% and 21 basis points to 3.70%, respectively, and gold prices surged nearly $40 to $1,867 per ounce after a sharp drop of $33 on Tuesday.

Overall, the February non-farm report still shows that the US labor market remains strong, but some data is beginning to show signs of cooling. Against the backdrop of high interest rates in over 40 years, the market has reacted very sensitively, with expectations of Fed rate prospects quickly weakening, the US dollar and US Treasury yields plummeting, and driving gold prices soaring.

The short-term direction of gold prices still depends on the US economic data situation. The US February CPI report, to be released next Tuesday (March 14th), is particularly important. If core inflation or detailed data shows signs of a decline in inflation, it may push the US dollar and US Treasury yields further lower, thereby boosting gold prices. If the data continues to show sticky inflation, the US dollar and US Treasury yields may not decline as quickly, which could put some pressure on the rise in gold prices.

Due to the release of non-farm job data and the unemployment rate on Friday, XAUUSD surged significantly, breaking through the key resistance level of 1857, and the overall trend is leaning towards bullish. However, whether it can successfully stabilize still requires further waiting for data releases. Currently, there is a need for a technical correction in the market, so do not be overly bullish. I will continue to monitor the release of CPI data and provide specific operational strategies at that time. Please stay tuned.

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see you next week