On the final trading day of the week, gold is licking its wounds while remaining above the $1,900 level. Traders are waiting for the all-important United States Nonfarm Payrolls data to place new directional bets on the gold price.
The US dollar is on the defensive. Despite contradictory statistics from the United States, US Treasury bond rates remain stable.
The US Dollar (USD) saw good two-way movement following the release of top-tier US economic data. On Thursday, but closed the day considerably down. Despite widespread risk aversion and the continuous rise in US Treasury bond rates. The US Dollar Index surged to weekly highs of 103.60 ahead of the US Open. As traders hailed an unexpected increase in the US ADP Employment Change. The data for June came in at 497K, compared to the projected 228K. And Previous reading of 267K words. The surge in US Treasury bond rates continued after ADP data raised expectations for a 25 basis point (bps). US Federal Reserve (Fed) rate hike this month while also boosting. The argument for further Fed tightening later this year.
Gold prices reversed their early gains and fell to four-day lows of $1,903 on renewed US Dollar demand. The gold price’s decline, however, was short-lived. As US Dollar sellers returned on mixed US JOLTS job openings data and the ISM Services PMI. According to the latest Job Openings and Labor Turnover Survey data from the BLS. Job openings decreased to 9.82 million at the end of May, down from an upwardly revised 10.3 million in April. Markets have anticipated Openings are expected to dip to 9.935 million in May. The June US ISM Services purchasing managers’ index (PMI) was 53.9. Slightly higher than the 51.0 anticipated. Despite the positive headline figure, the ISM Services components were mixed. Which disappointed US Dollar bulls. The strong drop in the US dollar aided Gold’s modest recovery to reclaim the $1,900 level on a daily closing basis.
Nonfarm Payrolls in the United States hold the key to the gold price.
Friday’s Nonfarm Payrolls and pay inflation statistics will be crucial for the gold price, which is down for the third day in a row. Economists predict the US economy will add 225K jobs in June, compared to the 339K recorded in May. The average hourly earnings are In the reporting period, observed climbing 4.2%, somewhat slower than May’s 4.3% growth. Lower-than-expected US employment and pay inflation figures are anticipated to cast doubt on expectations on future Fed rate rises after July, causing a major sell-off in the US Dollar and US Treasury bond rates across the curve. In such a case, the gold price may profit and rebound toward the $1,950 level. In contrast, a shocking US labor market data, particularly following the ADP explosion, might cause gold to resume its slide toward $1,870, since a tighter US labor market will allow the Fed to continue raising interest rates.
Technical analysis
According to the daily chart, the gold price continues to fight with the dollar. $1915, the important falling trendline (wedge) resistance. A daily close above the latter will confirm the development of a bullish wedge.
It’s worth noting that gold has been trading within a falling wedge since reaching new highs of $2080 in early April.
Gold sellers, on the other hand, continue to lurk at higher levels, as the prior week’s Bear Cross continues in play. The 14-day Strength Index (RSI) remains below the midline, suggesting that any price increases in gold are likely to be brief.
On the upside, gold bulls require a strong break above the falling trendline resistance of $1,915 on a daily closing basis to launch a rally toward the $1,950 mark, where the slightly bullish 50-Daily Moving Average (DMA) aligns. The 21 DMA, however, stands at $1,930. Gold bulls will continue to have difficulties.
On the downside, the previous day’s low of $1,903 provides immediate support, below which the $1,900 critical level will be tested. The next support level is expected to be at the three-month low of $1,893. If all of the above caps fail, gold sellers will target the $1,870 static support.
