The DXY US Dollar Index rebounded to 92.09, exerting downward pressure on the yellow metal. Technically, gold prices may be forming a "Double Top" pattern after failing to breach the 1,835 resistance for a second try. The neckline and 1,784 (61.8% Fibonacci Retracement) are the immediate support levels. Bullish momentum could be slowing down as the MACD indicator flattens.
Neel Kashkari, Minneapolis Fed President, stated Sunday that the Delta variant could prevent some Americans from searching for work and potentially hurt the recovery of the labor market. Friday's nonfarm payrolls report, which is expected to rise by 900k, will be in the spotlight. A major miss could strengthen the Fed's dovish stance, weaken the US Dollar and buoy gold prices.
The global viral resurgence raises questions about the economic recovery. Many countries have reimposed stricter social-distancing policies in response to the rapid spread of the Delta strain strain. This could delay the plans of other central banks to reduce pandemic-era stimulative efforts and brighten the prospects for precious metals.
Treasury yields were affected by growth concerns, which sent real yields (nominal inflation) to new lows. The 10-year rate for inflation-indexed securities fell by -1.18% Friday, and has not changed much today (chart below). The upside of precious metals could be cushioned by falling yields, as they mean that the opportunity cost to hold the non-interest bearing metal is lower.