Gold: Potential Signals Point to a Deeper Correction
George Lam June 7, 2020 10:51 PM
Spot gold sank 1.5% on day to $1,686 on last Friday, as investors were shocked by a 2.5 million increase in U.S. nonfarm payrolls in May...
Spot gold sank 1.5% on day to $1,686 last Friday, as investors were shocked by a 2.5 million increase in U.S. nonfarm payrolls in May. The surprising growth in jobs signals that the worst for the labour market is probably over, and could mark a turning point for gold price, which had surged as much as 20% from March.
The Federal Reserve will release its monetary policy statement on Wednesday and investors will watch closely if the latest jobs report would affect Fed's stance.
From a technical point of view, spot gold has broken below a rising wedge pattern as shown on the daily chart, signaling a potential downturn. Moreover, it has breached below the 50-day moving average, while the relative strength index has shown a bearish divergence. Bearish investors might consider $1,725 as the nearest resistance level, with prices likely to test the 1st and 2nd support at $1,645 and $1,610 respectively. Alternatively, a break above $1,725 would indicate that gold has stabilized and trigger a revisit to $1,755 on the upside.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.