• Gold dips sharply to $2,296 in response to US data showing an increase in employment costs, indicating persistent inflationary pressure.
• A stronger US Dollar and higher Treasury yields contribute to XAU/USD decline as market anticipates cautious Fed approach to rate adjustments.
• Upcoming economic events, including ISM Manufacturing PMI and Fed's policy decision are highly anticipated by traders for further market direction.

Gold prices drop below the $2,300 threshold on Tuesday as data from the United States (US) show that employment costs are rising, thus putting upward pressure on inflation. Consequently, the US Federal Reserve (Fed) would need to be patient when lowering rates as stated two weeks ago by Fed Chair Jerome Powell.

XAU/USD trades at $2,296, down by more than 1.50% on Tuesday, amid rising US Treasury bond yields and a stronger US Dollar. Data from the US Bureau of Labor Statistics (BLS) witnessed a jump in the Employment Cost Index (ECI) in April. Besides that, American consumer sentiment deteriorated further, as revealed by the Conference Board in its April report.

Ahead of the week, the US economic docket will remain busy. Still, traders will focus mainly on the ISM Manufacturing PMI, the Fed’s monetary policy decision, and the US Nonfarm Payrolls report.