Gold: Will Nonfarm Payrolls Change Gold Technical Outlook?
George Lam June 4, 2020 11:36 PM
Spot gold remains trading within a consolidation range in the short term, will Nonfarm Payrolls change its technical outlook?
Yesterday, spot gold showed resilience after posting the largest daily decline in a month on Wednesday. Despite a stronger-than-expected U.S. ADP private jobs report for May and a steady decline in initial jobless claims, the precious metal was lifted by the European Central Bank's decision to expand its pandemic emergency purchase programme by 600 billion euros.
Some investors doubted that the ADP report may have over-estimated the labour market condition and waited to confirm with the official jobs data due later in the day. Nonfarm payrolls are expected to drop by 7.5 million in May (compared with a 2.76 million private job losses estimated by ADP) and jobless rate is anticipated to jump to 19.1% from 14.7% in April, according to Bloomberg's survey estimates. Nevertheless, investors would have to be cautious that there are growing signs of economic recovery, which could be negative to gold prices.
Previously, we questioned whether the precious metal is losing momentum on an intraday basis. From a technical point of view, spot gold remains trading within a consolidation range as shown on the daily chart. Even though it still maintains a bullish bias in the short term, investors have to be alerted that the relative strength index keeps showing a bearish divergence.
The level at $1,680, a previous resistance which now acts as a support, is still expected to be the nearest support. On the upside, a clear break above the nearest resistance at $1,750 is needed for gold to advance further to test the next resistance at $1,785.
In an alternative scenario, losing $1,680 would change the technical outlook and suggest that gold may be due for a deeper correction. The next supports at $1,640 and $1,600 might be exposed.
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.