At the start of the week, gold is trading slightly below the $1,930 level. As bulls take a rest following a strong rebound staged last Friday. The US Dollar (USD) is making a slight recovery attempt early Monday, reflecting the rise in US Treasury bond rates. Throughout the curve following the severe sell-off caused by the US Nonfarm Payrolls report.
Nonfarm payrolls in the United States have revived gold bulls.
The US Dollar (USD) came under tremendous selling pressure and was wiped out. Weekly increases followed the release of the highly anticipated US job market data on Friday. Which revealed considerably slower-than-expected employment growth in June. The US economy added 209K jobs in June, compared to 225K projected. And a previously corrected number of 306K. The pay inflation component of the jobs data jumped 4.4 percent year on year. But the US unemployment rate fell to 3.6% in the reported period, as largely predicted.
Weak employment statistics fueled fears that the labor market in the United States was easing, leading investors to assume that the Federal Reserve (Fed) would be less proactive in tightening policy than previously anticipated. Markets are already pricing in two more Fed rate rises this year, following the probable 25 basis point (bps) boost in July. Against this backdrop, the US Dollar Index fell by a large amount again, this time to the 102 level, sending gold prices up to the $1,930 round number. Meanwhile, the benchmark 10-year US Treasury bond yield has returned to the critical threshold of 4.0%.
So far in Monday’s trade, the gold price appears to be gaining steam for the next move higher. However, disappointing Chinese inflation numbers have reignited fears about China’s economic development, restoring the US Dollar’s safe-haven appeal. China’s Producer Price Index (PPI) declined for the ninth consecutive month, falling 5.4% year on year after falling 4.6% the previous month. The country’s Consumer Price Index (CPI) was unchanged year on year, compared to a 0.2% increase in May, according to the National Bureau of Statistics (NBS). Cooling inflationary pressures in the world’s largest gold consumer might be a drag on the precious metal.
Gold traders may also avoid taking new directional bets ahead of Wednesday’s important US CPI data release, which may have a substantial influence on the Fed’s rate rise forecast as well as US Dollar values. Meanwhile, Fed speak, broad market mood, and Fed pricing will continue to have an impact on gold price action.
Gold Technical analysis
Gold price verified a bullish wedge formation after closing Friday above the declining trendline resistance, then at $1,915, as seen on the daily chart.
However, gold bulls encountered firm resistance around the bearish 21-Daily Moving Average (DMA) of $1,929, proving to be a difficult nut to crack.
A To prolong the upward break from a falling wedge, a sustained break above the latter is required, opening the door for a test of the downward-sloping 50 DMA at $1,961. Prior to that, gold buyers will confront a formidable barrier at the marginally bullish 100 DMA of $1,949.
The 14-day Relative Strength Index (RSI) stays below the midline, keeping gold sellers optimistic.
On the downside, the wedge resistance-turned-support, presently at $1,910, provides immediate support. The $1,900 critical level will be the next target for them.
Further south, the three-month low of $1,893 may provide some relief to Gold bulls.
