• XAU/USD remains in an intraday consolidation near $1,815 after US data.
• US ADP employment reports show an increase in private payrolls above expectations.
• US Dollar holds onto recent gains, US yields retreat.

Gold prices continued to move near $1,815/oz following the release of US employment data that surpassed expectations. XAU/USD dropped toward $1,810 and managed to remain above. The yellow metal is trading $35 below the level it had a day ago, hit by Fed Chair Powell’s testimony.

Data keeps pointing to a tight US labor market

Automatic Data Processing (ADP) reported on Tuesday that private sector employment rose by 242K in February, above the 200K expected. January’s numbers were revised higher from 106K to 119K. ADP’s Chief Economist commented that they are seeing robust hiring but warned pay growth “is still quite elevated”.

The numbers continue to show a tight labor market keeping the doors open to more action from the Federal Reserve. The ADP report contained no major surprises, having a modest impact on markets. The round of labor market data will continue on Thursday with Jobless Claims and on Friday with Nonfarm payrolls.

Next on Wednesday, is Fed Chair Jerome Powell testimony before the US Congress. On Tuesday, he triggered the decline in XAU/USD by opening the doors to a 50 basis points rate hike at the March FOMC meeting.

Jerome Powell Testimony: Fed Chair to answer US House of Representatives after hawkish remarks

The Dollar rose marginally after the report, while US yields retreat. Despite the recovery in Treasuries, XAU/USD remained steady. Dollar’s strength and risk aversion are keeping the upside limited, while at the same time, leave the metal vulnerable to more losses.

If XAU/USD breaks under $1,808 (daily low) over the next hours, a test of the critical $1,800 support zone seems likely. On the upside, it needs to consolidate firmly above $1,815 in order to gain some support.

Technical levels