The gold market is holding Friday’s hefty losses, trading below $1,950 early Monday. The stunning US Nonfarm Payrolls (NFP) day rescued the US Dollar (USD) and US Treasury bond rates. All eyes are now on the US ISM Services PMI for new trade opportunities.
The United States Services PMI will be the next emphasis.
So far in Monday’s Asian session. The US Dollar has held its recent rebound gains, hoping to extend Friday’s upturn fueled by an unexpected rally. increase in the headlines in the United States Nonfarm Payrolls figures. According to the NFP data, the US economy added 339K jobs in May. Compared to 190K predicted and an upwardly revised prior number of 294K. Wage inflation in the jobs report slowed to 4.3%. While the US unemployment rate increased to 3.7% in the reported period, compared to 3.5% expected.
In response to the strong NFP statistics, gold prices reversed their three-day gains and fell over $30. The gold price also bore the brunt of a rapid recovery in US Treasury bond yields. Throughout the curve, even as markets continued to price in a 75% chance. That the US Federal Reserve (Fed) will halt at its June 13-14 policy meeting. After the Fed’s decision to raise interest rates. Data on employment in the United States is mixed. The risk-on market profile caused by increasing betting on a Fed pause this month reduced demand for US government bonds. Resulting in a stunning surge in US Treasury bond rates.
The word that physical gold demand in India slowed last week due to a rebound in local prices caused customers to postpone purchases weighed on the gold price. So far in Monday’s trade, a cautiously positive market atmosphere and a wide US Dollar rise have kept gold sellers afloat.
Investors are encouraged by an increase in China’s Caixin Services PMI.
Investors are encouraged by an increase in China’s Caixin Services PMI, which jumped from 56.4 in April to 57.1 in April. Furthermore, news of OPEC+ oil supply curbs increased oil prices and supported risk sentiment. However, there is some doubt about the Fed’s intentions. The next policy action, as well as the impending US ISM Services PMI, keep risk appetite in check.
The headline ISM Services PMI is expected to fall to 51.5 in May from 51.9 in April. Meanwhile, the ISM Services Price Paid for May is expected to fall to 57.8 from 59.6 in April. Disappointing US statistics are anticipated to contribute to the Fed pause narrative, perhaps resuming the US Dollar’s decline. If risk sentiment deteriorates, the safe-haven US Dollar may see renewed demand, putting pressure on the gold price.
Technical analysis of the gold price:
The bullish forecast for gold was denied as the 14-day Relative Strength Index (RSI) fell down below the 50 mark that divides the bullish and bearish zones.
The Bear Cross persisted as well. Gold purchasers were once again met with rejection at the downward-sloping 21-Daily Moving Average (DMA), which is presently at $1,979.
The flattish 100 DMA at $1,939 currently provides immediate support. Daily closure below the latter will restart the gold price decline towards the $1,900 barrier.
Prior to that, the March 17 low of $1,918 may come to the aid of gold purchasers.
However, gold bulls continue to trade with caution in the face of a Bear Cross and ahead of a vital US labor market data.
However, any rebound will be noteworthy only if it is accepted above the 21 DMA resistance, after which the 50 DMA at $1,991 will challenge the bearish commitments.
Acceptance exceeding these degrees of resistance will result in the the $2,000 mark is back on bulls’ radars.
