Gold finds interim resistance near $1340, eyes on US data

• Gold climbs to multi-month highs on USD weakness.
• ADP employment change is expected to come in at 180K in May.
• 10-year US T-bond yield struggles to extend rebound.

The troy ounce of the precious metal gained nearly $50 in the previous four trading days and preserved its momentum to climb to its highest level since February 20 at $1340. With the greenback staging a modest recovery in the last hour, however, the XAU/USD pair erased a small portion of its gains and was seen trading at $1334, adding nearly $10 on a daily basis.

The heavy USD selloff that got triggered earlier this week following some dovish comments from Fed officials, which caused the probability of a Fed rate cut to increase, became the primary driver of the pair's upsurge. Although the 10-year US T-bond yield and major equity indexes in the U.S. staged a decisive rebound yesterday, the USD weakness allowed gold to remain strong despite the risk-on flows. 

Later in the session, the ADP's private sector employment report and the IHS Markit and the ISM's PMI reports for the service sector will be looked upon for fresh impetus. Ahead of the data, the DXY is virtually unchanged on a daily basis.

Meanwhile, the 10-year US T-bond yield is staying flat on the day, hinting at neutral market sentiment and suggesting that the USD's market valuation could remain as the sole driver of the pair's action in the second half of the day.

Technical levels to consider