Gold Price Analysis: XAU/USD drops to fresh weekly lows, closes in on $1,700
- Precious metal struggles to find demand amid risk flows.
- Upbeat ADP employment report from US boost US stock index futures.
- US Dollar Index stays relatively calm near 97.50 ahead of PMI data.
The troy ounce of the precious metal lost more than $10 on Tuesday and extended its slide on Wednesday with the risk-on market atmosphere making it difficult for gold to find demand. As of writing, the XAU/USD pair was down 1.4% on the day at $1,704.
Focus shifts to US data, Wall Street
The monthly data published by the Automatic Data Processing (ADP) Research Institue showed on Wednesday that employment in the US' private sector declined by 2,760,000 in May. This reading came in much better than the analysts' estimate for a fall of 9 million and provided an additional boost to risk sentiment.
Commenting on the data, “the upbeat data has pushed S&P futures above 3,100, extending its gains and the greenback is under marginal pressure," said FXStreet analyst Yohay Elam. "However, some suspect that the magnitude of the shock to the job market makes calculations hard. Missing the mark by so much may cause investors to shrug off the report.”
Reflecting the positive market mood, major European equity indexes are rising between 1.4% and 2.6% on the day while the S&P 500 futures are gaining 0.7%.
Meanwhile, the greenback is staying relatively resilient against its rivals and allowing the risk rally to continue to drive XAU/USD's movements. At the moment, the US Dollar Index is posting small daily losses near 97.50.
In the second half of the day, the ISM's Non-Manufacturing PMI will be looked upon for fresh impetus. Additionally, investors will keep a close eye on Wall Street's performance.
Technical levels to watch for