Gold surges over 3% as dip buyers pounce on weaker USD

NEW YORK (February 6) Gold price (XAU/USD) rallies more than 3% on Friday, poised for a decent weekly gain as dip buyers emerged, following a session that pushed the yellow metal below the $4,800 mark. Worth noting that Friday has been a volatile session, with the non-yielding metal falling to a three-day low of $4,655 before erasing those previous losses. At the time of writing, XAU/USD trades at $4,963.

XAU/USD stages a sharp rebound toward $4,950 as soft US labor data revives Fed easing bets

The non-yielding metal is enjoying a healthy recovery from Thursday. Greenback’s initial weakness on Friday reflected worse-than-expected US labor market data on Thursday, which fueled speculation for further easing by the Federal Reserve (Fed). This prompted traders to buy bullion’s dip even though US Treasury yields began to show signs of life.

The data front was light as January’s Nonfarm Payrolls were delayed for February 11, due to the US government shutdown. Consumer sentiment in the US improved, revealed the University of Michigan (UoM) survey, which should be reviewed with a pinch of salt, as it revealed that “Sentiment surged for consumers with the largest stock portfolios, while it stagnated and remained at dismal levels for consumers without stock holdings,” stated Joanne Hsu, the Survey’s Director.

On the geopolitical front, US-Iran talks began in Omani, with both parties agreeing to continue negotiations. Despite this, it is said that Iran refused to end nuclear enrichment in discussions with the US, as revealed by The Wall Street Journal.

The week ahead will feature the release of US employment situation, Retail Sales and the Consumer Price Index (CPI). Also, traders would be dissecting speeches by a flurry of Federal Reserve officials.

FXStreet