GOLD: US NFP in focus - Possible New Short Setup - READ!

The price of gold has dropped to its intraday low and has given up its biggest daily gain in a week due to a volatile trading session. The Bank of Japan's inaction regarding inflation concerns has failed to calm the markets, while geopolitical worries and the US dollar's recovery from its intraday low have also put pressure on XAU/USD. Key central bank announcements and the US employment data for February will be significant in providing fresh impetus for the market.

Gold price (XAU/USD) is currently experiencing downward pressure, trading near $1,828, as investors anticipate the US jobs report after a tumultuous move on the Bank of Japan's inaction on Friday. The latest weakness in the price of gold is linked to the risk-off sentiment rather than the US Treasury bond yield and the US dollar, which have both rebounded recently.

The Bank of Japan has expressed inflation concerns and is joining the New York Fed in challenging policy doves, suggesting more rate hikes and questioning economic growth, which is teasing gold sellers.

The US Dollar has remained weak due to mixed signals from the previous day's US employment data, which has supported the price of gold. Additionally, positive news from Bloomberg regarding China's consumer spending showing signs of a strong rebound, along with hopes for more stimulus from China and the US, could be beneficial for the gold price.

However, the cautious sentiment ahead of the Nonfarm Payrolls (NFP) and the latest risk-off mood, coupled with geopolitical fears, are weighing on market sentiment. Among them, US President Joe Biden's budget proposal for 2024 and the US partnership with the UK and Australia for nuclear submarines are affecting risk appetite and the XAU/USD.

The market will closely observe the US jobs report for February as traders have recently lowered their bets on a 50 bps rate hike in March.