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  • Gold Price Analysis: XAU / USD Closes Below $ 1,840 As Disappointing NFP, 200-DMA Still In Sight

Gold Price Analysis: XAU / USD Closes Below $ 1,840 As Disappointing NFP, 200-DMA Still In Sight

By on May 8, 2021 0
  • Gold bulls have their eyes on a monthly target of 61.8% Fibo of $ 1,850.
  • In the shorter term, bears can aim for at least a drift towards 38.2% Fibo at 1.807 or daily support, near $ 1,800.
  • Will NFP be the catalyst to test $ 1,820 / 25 commitments on a weak US dollar?

Update: Gold retreated from new three-month highs of $ 1,843 and closed below $ 1,840 on Friday, posting a weekly gain of 3.5%. Gold’s staggering rally on Friday could be attributed to a big misfire on the NFP stock number, which came in at 266K in April against expectations of 978K and 770K previously. Disappointing US jobs reports bolstered the Fed’s dovish expectations to “cut rates for longer,” crushing the dollar alongside Treasury yields. However, gold eased from multi-month highs into the weekly close as US rates reversed NFP-induced losses amid the Wall Street surge.

Despite the retracement, the price of gold remains poised to recover the 200-DMA at $ 1852. In the coming week, gold traders are anxiously awaiting CPI data and US retail sales for further clues on the economy. Meanwhile, a slew of Fedspeak will also be closely watched.

Lily: Gold could target 200-day SMA

Update: Gold finally broke out of its intraday consolidated trading range and hit an almost three-month high, around the $ 1,838 region at the start of the North American session. The US dollar saw aggressive selling in response to the disappointing US NFP report, which showed the economy added just 266K jobs in April, against consensus estimates pointing to a reading of 978K. On top of that, the previous month’s reading was also revised to 770K from 916K previously. This was accompanied by an unexpected rise in the unemployment rate to 6.1% from 6.0% in March.

The data reaffirmed market expectations that the Fed will keep interest rates near zero for a longer period. This was further reinforced by a sharp drop in yields on US Treasury bonds, which was seen as another factor that gave the unproductive XAU / USD a big boost. Rather, the bulls did not appear to be affected by the underlying bullish sentiment in financial markets, which tends to push flows away from traditional safe-haven assets, including gold.

Update: Gold (XAU / USD) holds higher, approaching three-month highs of $ 1,822 reached earlier in the Asian session. The price of gold is up nearly 3% this week, on track to record the best week in six months. The bearish nuance in the US dollar and Treasury yields, especially after the latest dovish comments from Fed policymakers, continue to provide support for gold.

Investors are eagerly awaiting the US NFP report for the next direction in gold prices. Only an NFP blowout could stem the surge in gold, as it would rekindle the Fed’s expectations. The payroll for securities is expected to increase by 978K in April against 916K recorded in March.

Lily: Gold Price Forecast: XAU / USD Looks at $ 1,840, Overbought Conditions, NFP May Be Troublemaker

Update: Gold bulls (XAU / USD) take a break around $ 1,820, up 0.24% intraday, after printing new high since mid-February ahead of the opening of Friday’s European session . Gold buyers have previously applauded hopes for a prolonged monetary policy, as suggested by Fed policymakers, as well as faster coronavirus (COVID-19) vaccinations due to the latest patent waiver attempt vaccines. However, the risk mood is fading as Brussels traders become cautious about key US non-farm payroll data.

Gold is recently taking cues from market optimism and as a result a pullback in equity futures as well as 10-year US Treasury yields appear to have weighed on prices. Despite this, gold buyers remain bullish as the US jobs report for April is likely to print strong jobs numbers.

Update: Gold (XAU / USD) consolidates nearly three months of $ 1,818 so far this Friday, after witnessing a meteoric rally finally above the $ 1,800 level on Thursday. The main catalyst for gold’s over 1% rise was the Fed’s dovish expectations. Markets continue to believe that the Fed will continue with its accommodative monetary policy, despite the strengthening economic recovery.

US stocks rose longer on the Fed’s easy policy expectations, while Treasury yields fell alongside the dollar. The price of gold ignored strong jobless claims in the United States as all eyes remain on Friday’s NFP data, which is expected to show a rise of 978K last month. 50-monthly SMA near $ 1,835 could keep a lid on gold prices.

Lily: US Nonfarm Payrolls April Preview: When the economy is booming, it’s all about rates

Gold prices were indeed up on Thursday as the US dollar took a downward journey.

XAU / USD had added around 1.57% by the end of the match on Wall Street after moving low of $ 1,782.04 to break the psychological level of $ 1,800 and continue to mark a high of $ 1,818.13.

The US dollar slipped to its lowest point in three days as the global market’s risk appetite improved.

The DXY was down around 0.4% at the close after falling from a high of 91.37 to a low of 90.88.

US employment data was at the center this week.

Fewer Americans have filed new claims for unemployment benefits COVID-19 vaccination efforts and massive government stimulus have led to a further reopening of the economy.

That being said, Federal Reserve speakers continued to downplay the risks of rising inflation this week.

Ahead of Friday’s nonfarm wages, Thursday’s data showed that the number of jobs cut by U.S. companies fell 25% MoM in April and was down 96.6% for the year.

Initial jobless claims fell to the lowest level since mid-March 2020. Markets forecast that core inflation is likely to consistently exceed the Fed’s target over the next few years, but the Fed is unlikely to start raising interest rates before 2023.

NFP is important for the gold market

For the day ahead, Westpac analysts see “1.1 million new jobs and believe further upward revisions from previous months could be seen as well.”

Analysts believe this should bring the unemployment rate down to 5.8%.

In addition, they said average hourly compensation is expected to increase slightly by 0.1%, given the remaining weakness in the labor market.

Meanwhile, it may be surprising in the data to really convince the market that the Fed will cut or raise rates sooner than they would like.

Preliminary analysis, weekly gold chart

Source: Gold Price Analysis: Bulls Return to Town Thanks to Critical Resistance

Live market, weekly gold chart

Meanwhile, the latest gold news that has been updated over the past few sessions has identified different levels of use of the technical and naked eye confluence detector.

Here is this article on gold: Gold Price Analysis: Gold Bears Seek Correction To Test Bullish Commitments

It was noted that “The Technical Confluence Detector indicates that the next resistance line is around $1,822, this is where the Pivot Point One-week Resistance 3 hits the gold price chart.

The other levels of no were as follows ”.The next substantial hurdle for XAU / USD is waiting at $1,850, which is the convergence of the 200-day simple moving average and the 1-month resistance of Pivot Point 2.

Initial support is around $1,810, this is where the one-month PP R1, the one-day PP R3, and the 161.8% one-week Fibonacci all meet on the gold price chart.

Meanwhile, from pure price action analysis and forecast, using Fibonaccis and typical price action patterns, the following has been assumed:

Since the price of gold has now reached a resistance structure, and given the daily ATR of around $ 21, gold can easily drop back down to “test the earlier resistance which has confluence with a 38.2% Fibonacci retracement of the last uptrend. “

Daily gold charts, prior analysis

The zoomed daily gold chart, live market

In the shorter term, however, and considering that non-farm payrolls are imminent, if the market should take a break, ”Over the hourly period, there is a compelling case for higher demand at the confluence of the daily 23.6% Fibo that meets the 38.2% hourly Fibo and 10 EMA.

Gold card over 1 hour, preliminary analysis

Live Gold Market, 1 hour duration

If the “only” nonfarm payroll lives up to expectations or even disappoints, then we have a scenario where the US dollar could continue to decline and support gold prices.

The thesis is that the Federal Reserve will examine transitory increases in inflation and keep benchmark interest rates around zero for the foreseeable future. This risk is also bearish for real returns.

This combination should, in theory, be positive for gold and negative for the US dollar.

A drift below 38.2% Fibo could be satisfied with demand and price may well extend to test the targeted box between -272% and 61.8% Fib retracements of the expected hourly correction range.

This zone keeps a run towards the aforementioned $ 1,850 target zone on the monthly chart:

For a longer-term internal view of FXStreet for the price of gold, the following can be read:

Gold Price Forecast 2021: XAU / USD Seeks To Build On 2020 Gains As Central Banks Remain Dovish