XAUUSD - Decoding how Gold, US Dollar and Yields Might React

Employment gains above 200,000 and hot wages will reinforce upside inflation risks, increasing the probability of one or two additional quarter-point hikes in 2023 and higher rates for longer. This scenario should be a tailwind for the U.S. dollar and Treasury yields, but would put downward pressure on gold prices and other rate-sensitive assets.

Should the headline NFP print fall below the 150,000 threshold and wage growth moderate more than envisioned, traders may quickly recalibrate the Fed monetary policy outlook, reducing wagers in favor of further rate hikes on the assumption that the economy is starting to roll over. This scenario would weigh on Treasury yields and drag the U.S. dollar, but would stand to boost gold prices.
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