Gold is still thinking of the next step

1,748 – 1,765, where next?

Market analyst – IFC Markets

After a sharp increase and decrease last Friday, gold is back to its pre-Nonfarm Payrolls report levels and flirting around 20&50 HMA levels. Created range (1,748 – 1,765) has been visible since the middle of last month. 

Last Friday, and after NFP numbers the first impression of the published data should have been supported by the Dovish policies fans that cased free fall in the US dollar rate to lift the gold. However a few hours later, when the market analyzed the data, the overall conclusion was that the labor market is not that bad, while other factors including inflation and GDP, confirming that the economy is recovering and prices are increasing, returned the charts and prices to its previous levels. 

While Bond Yields are still increasing, which is negative for the Gold price, weaker USD was supporting the Gold price to touch its third Resistance above 1,764. However later when the US dollar touched the 12 month high above 94.50 again weighted on Gold price to send it back to its pivot point at 1,754. 

In the future markets, Wall Street posts modest intraday gains, but European leading indices, are losing 0.5% on average, especially after weaker than expected employment data in the UK and German ZEW Economic Sentiment. Earlier in Asia, Nikkei 225 closed with a 0.94% loss, and Shanghai lost 1.43%. 

To understand the Gold movements, we have to follow the Bond Yields, US Dollar index, and Stock Markets. With higher Bond yields or sideways around current levels (1.60%) remain bearish, gold should trade at the same range with next support sitting around 1,740 and 1,720 after that, if the stock markets do not reduce much. But if the stock markets also have a large decline, then we can see the range between 1,750 and 1,770. For further bullish movements, 100 DMA and key resistance at 1,800 remains a formidable barrier. 

Gold technical analysis


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