Gold: Potential Signals Point to a Deeper Correction
George Lam June 8, 2020 12:51 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.
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.