Fresh Highs In Asia; U.S. NFPs Eyed

Gold is ~$3/oz firmer to print $1,872/oz at typing, operating a shade under four-week highs made earlier in the session ($1,874,1/oz).

• To recap Thursday’s price action, gold closed ~$22/oz higher for a second straight day of gains. The overall move higher was facilitated by a downtick in U.S. real yields and the USD (DXY), with the latter giving ground against risk-on proxies (e.g. AUD, NZD) as debate re: stagflation did the rounds amidst speculation of the potential for OPEC+ production increases. The precious metal’s sharpest upward moves in the session were also observed after the release of softer-than-expected U.S. ADP employment data, which came in at its lowest since Apr ‘20.
• Cleveland Fed Pres Mester (voter) on Thursday pointed to her support for 50bp hikes in the Jun and Jul FOMCs, matching recent Fedspeak from colleagues Daly and Bullard, while flagging inflation data-dependence for a potential upward/downward shift in rate hike expectations for the September meeting onwards. July FOMC dated OIS continue to price in a cumulative ~102bp of tightening by that meeting, pointing to relatively stable expectations for back-to-back 50bp hikes in the upcoming two FOMCs.
• Looking ahead, U.S. NFPs (1330 BST) and the ISM Services index (1500 BST) headline the data docket later today.
• From a technical perspective, bullion has broken initial resistance at $1,869.7/oz (May 24 high), and sits a little below resistance at the 50-Day EMA (a little under ~$1,877/oz).