• Gold price tests the $2,300 region as the US Dollar extends its correction.
• Weak US Services PMI report voiced concerns over the economic outlook.
• US yields rise as Fed rate cut expectations for June ease further.

Gold price (XAU/USD) is slightly down after securing another fresh record high above $2,300 in Thursday’s European session. The precious metal has benefitted from the soft US Dollar, knocked down after the United States Institute for Supply Management (ISM) delivered a weak Services PMI report for March.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extends its downside to 104.00. 

10-year US Treasury yields are slightly up at 4.36% as market expectations for the Federal Reserve (Fed) starting to unwind its higher interest rate stance in the June meeting have eased. The CME FedWatch tool shows that traders are pricing in a 58% chance that the Fed will trim interest rates in June, down from 70% a week ago. Non-yielding assets such as Gold tend to face liquidity outflows when the demand for interest-bearing assets, such as US bonds, strengthens. However, this hasn’t been the case recently for Gold, which has been edging higher for several trading sessions even as yields also held up.

Meanwhile, investors await the release of the US Nonfarm Payrolls (NFP) report for March, which will be published on Friday. The US NFP report is expected to show US employers added 200K fresh payrolls over the month, lower than the former reading of 275K. The Unemployment Rate is anticipated to remain steady at 3.9%. Average Hourly Earnings, which gauge wage growth and provide significant guidance on the inflation outlook, are expected to rise at a slower pace of 4.1% from 4.3% in February on a year-on-year basis. 

Robust wage growth and labor demand could further dampen Fed rate cut expectations for June, while easing labor market conditions could boost rate cut hopes. This last scenario would likely have a negative impact on US yields and likely help Gold edge further up.