The yellow metal prices on Friday has reached near a high of  2-1/2-month  and were on track for their best week in five months, which is aided by a weaker dollar and a pullback in Treasury yields as investors cautiously await U.S. non-farm payrolls report which will be released at 12.30 G.M.T later today.

Brian Lan, managing director at dealer GoldSilver Central said that “The weaker dollar and U.S. Treasury yields dropping below 1.6% has helped gold prices to go above $1,800.”

He also said “The U.S. jobs data is very important point .If data comes out really good, we can see people being more positive on the economy and it might lead to Federal Reserve increasing the interest rates earlier than expected, which will impact gold.”

The dollar index slipped to a one-week low against its major rivals, which made the yellow metal less expensive for other currency holders, while benchmark U.S. 10-year Treasury yields hovered close to a two-week low.

Investors now are awaiting for the U.S. monthly jobs report due at 12.30 G.M.T to measure the Fed’s strategy on monetary support going forward.  And the data released on Thursday showed weekly U.S. jobless claims dropped to a 13-month low.

Elsewhere, Fed Chairman Jerome Powell and others have been  repeatedly asked about whether they’re concerned over the rising prices. Powell specifically has said that as long as interest rates stay low, the valuations are justified. “High asset prices in part reflect the continued low level of Treasury yields. However, valuations for some assets are elevated relative to historical norms even when using measures that account for Treasury yields,” the report states. “In this setting, asset prices may be vulnerable to significant declines should risk appetite fall.”

In an accompanying statement, Fed Governor Lael Brainard said the situation bears watching and points out the importance of making sure the system has proper safeguards. She specifically mentioned having banks increase their capital requirements during economic expansions as a buffer against downturns.

XAU/USD 4 Hour Chart:

Support: 1791.6 (S1), 1768.7 (S2), 1755.4 (S3).

Resistance: 1827.8 (R1), 1841.1 (R2), 1864.0 (R3).

Whether the US nonfarm payroll changes the direction of the greenback which is trading downside now, is yet to be seen. In the meantime we expect a bullish trend for XAU/USD.