• A report by the ADP Research Institute showing fall in the business payroll weighs on the US dollar.
• Recent moves of the Fed officials to dilute the rate hike expectation also weighs on the greenback.
• Market now pay attention to the European Central Bank and Bank of England meetings.

Gold trades higher against the greenback during the Thursday Asian session. This move can be related to the US dollar’s weakness since the traders shifted its attention from the hawkish fed. Moreover, downbeat US ADP Employment change for January also exerts downward pressure for US dollar.

A report by the ADP Research Institute portrayed that businesses’ payrolls fell by 301,000 last month, after a revised 776,000 gain in December and less than expectation of 5,03,000. It shows how the omicron variant has impacted on the American economy, and this will be weighed by the Federal Reserve as they decide on monetary policy.

The recent moves of the Fed officials to dilute expectations of a hefty 50 basis points hike in March by the U.S. central bank even with inflation at a 40-year high also weighs on the dollar.

The most hawkish St. Louis Federal Reserve President James Bullard said on Tuesday that he favors successive rate increases at the Fed’s March, May and June meetings. But he does not agree with the idea of starting with a half-percentage point hike in March and says that markets have already started to push up borrowing costs.

Moreover, Another hawk – Federal Reserve Bank of Kansas City President Esther George, said that the central bank should be cautious and could take less aggressive actions in raising interest rates by shrinking the balance sheet more forcefully.

Elsewhere, Nicholas Frappell, a global general manager at ABC Bullion said “The shift towards a more risk-on approach by investors is probably gold-negative, however, the resultant weakness in the dollar helps gold, and the decrease in US [treasury inflation-protected securities’] yields has provided support for gold.”

Traders now shift their attention to ECB and the BOE outcomes and looking on the latest strong fundamentals they will expect hawkish results, this could add to the downside pressure on the US dollar and favor gold.

XAU/USD 4 Hour Chart:

Support: 1796.9 (S1), 1787.4 (S2), 1780.4 (S3).

Resistance: 1813.3 (R1), 1820.3 (R2), 1829.8 (R3).

The cautious market sentiment ahead of ECB and BOE amid broad US dollar weakness favors the Bullion, we expect a bullish trend for XAU/USD.