Gold: US dollar lower in the open supporting gold above $1,700

• Gold elevated above $1,700 as markets presume negative rates from the Fed.
• US dollar under pressure in the open, helping to support gold. 

Gold is starting out the week in the consolidation of the March bull run, oscillating around $1,704 as market digest a US Nonfarm Payrolls that was not quite as bad as -22mn consensus, arriving at -20.5mn for April. The US dollar has rolled over to the bottom of the 99 handle helping gold to remain elevated for the open.

A dismal US Nonfarm Payrolls with the unemployment rate jumping to 14.7% from 4.4%, albeit below the 16.0% consensus will be a weight on the greenback for the start of this week. However, the focus will shift to the phased re-opening process of several US States as well as other nations such as the UK relaxing its lockdown measures.

Signs of economic recovery have stalled gold’s recent rally although there is still the possibility of the of Fed cutting rates to negative territory by early next year which has helped to bring gold above USD1,700/oz.

Yields are still under pressure

Markets will also be tuning in to the Federal Reserve's Chairman, Jerome Powell, this week, considering the shift in the FF futures curve. Bulls will be looking for a pushback against negative rates to help boost the US dollar. 

"Yields are still under pressure in the wake of the recent refunding announcements — a surge in supply continues to weigh on Treasury markets," analysts at TD Securities explained,

This concerns gold and precious metals inasmuch as rising yields offer an alternative safe-haven to the yellow metal — thereby putting pressure on prices. This poses another risk to gold's short-term outlook, along with the potential for real rates to rise in the near-term, while the Fed would be unwilling to cut rates below zero to further suppress real rates, thereby weighing on gold.

Gold levels