Currency Analyst since 2010

Gold: weekly scenario

By Sergey Ruban

Better-than-expected US employment data created a serious negative pressure on gold price. According to the US Department of Labor report, the Non-Farm Payrolls in June rose by 288K, while the unemployment rate fell to 6.1% from 6.3% in May. This indicates that US economic recovery may be gaining power. The news increased the number of rumors that US economic strength may force the Fed to reconsider its decision and raise interest rates sooner than expected. This, in turn, put pressure on the gold, which does not bring interest income.

As a result, market participants started selling the metal, and the price began to fall. However, towards the end of the session the selling pressure eased, as many investors left the market because of the long weekend in the United States which started already on Friday.

Nevertheless, given the recent data, prospects of gold have significantly deteriorated, and it will be now difficult for the price to go up. Moreover, if the data continue showing the acceleration of the American economic growth, gold may start sliding faster.

Trade recommendations

From a technical perspective the risks are neutral, while the metal is trading above the strong support at $1280.00/1300.00 and below the resistance at $1330.00. Accordingly, the confident break of these boundaries will point to further changes in the gold positions.

The consolidation below $1280.00 will open the way to the support around $1240.00 and $1200.00, while consolidation above $1331.00 will confirm growth to $1392.00 and $1433.00.

Chart. H4 XAU/USD

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