Gold prices (XAU/USD) rose nearly 2% on Wednesday despite the US Dollar remaining strong and US Treasury yields at high levels. The rise was supported by demand for safe-haven assets after mixed US economic data.
At 9.15am, gold prices were trading at $4,063, up 0.80% since opening in early Asian trading on Thursday.
Cautious sentiment in the market also supported gold prices. Federal Reserve (Fed) Chairman Kevin Warsh reiterated the central bank's commitment to reining in inflation until it returns to its 2% target, while saying the US labor market remains stable.
Meanwhile, the US Dollar Index (DXY) rose 0.18% to 101.35, while the 10-year US Treasury yield remained around 4.465%.
Typically, a rising dollar and bond yields weigh on gold, but demand for safe havens has managed to overcome these factors.
US economic data was mixed. ADP Employment Change for June recorded just 98,000 new jobs, lower than expectations of 113,000 and May's reading of 122,000.
In other developments, the number of layoffs recorded by Challenger fell 53% to 45,849, indicating the pace of job losses is slowing.
Meanwhile, the ISM Manufacturing PMI fell to 53.3 in June compared to expectations of 54. Despite the slowdown in manufacturing activity, the Prices Paid Index also fell to 73 from 82.1, indicating that inflationary pressures in the sector are easing.
On the geopolitical front, gold's risk premium eased slightly after the US and Iran signed a Memorandum of Understanding (MoU). Talks in Doha, Qatar also resumed with a focus on the management of the Strait of Hormuz and 60 days of talks on Iran's nuclear program.
Now, the market's attention is focused on the US Non-Farm Payroll (NFP) report due on Thursday. Market Restrictions
The market expects the US economy to add around 110,000 new jobs, while the unemployment rate is expected to remain at 4.3%. This data has the potential to be a key driver of the direction of gold prices in the near term.
