October 6, 2022 01:04 AM ET
By: AnalysisWatch
Gold (XAU/USD) has extended gains above the immediate $1,720.00 hurdle and is targeting a three-week high around $1,730.00. The precious metal is gradually rising as the U.S. Dollar Index (DXY) is showing a muted performance. The DXY staged a recovery after hitting its daily low at 110.80, but rising market sentiment will keep the DXY bulls at bay.
The yield on 10-year U.S. Treasuries has dipped below 3.75% as bets on a 75 basis point (bps) rate hike by the Federal Reserve (Fed) fell slightly. According to the CME Fedwatch tool, the probability of a three-quarter to one percentage point rate hike has fallen from 67.8% in early Tokyo trading to 64.7% in early European trading.
Positive U.S. ISM Non-Manufacturing PMI data and U.S. Automatic Data Processing (ADP) employment figures provided a sharp rebound in the DXY on Wednesday, but this weakened ahead of the U.S. Nonfarm Payrolls (NFP) data. Payrolls are expected to fall to 250k from 315k previously. The prospect of Fed rate hikes has forced companies to postpone capacity expansion plans, leading to a weaker consensus for the labor market data.