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Gold Choppy Trading Continues - Mixed NFP Figures in Play! 


During Friday's Asian trading session, the safe-haven-metal prices failed to stop its previous day losing streak and remained depressed around $1772 from the multi-year highs level, mainly due to the risk-on market sentiment backed by the release of positive data from the U.S. and China. On the other hand, the increasing number of COVID-19 cases from across the globe and simmering tensions between the U.S. and China turned out to be the key factors that kept a lid on any additional losses in the gold prices. However, the selling bias surrounding the U.S. dollar might provide some support to the dollar-denominated commodity (gold) and help limit deeper losses. At the moment, the yellow metal prices are currently trading at 1,773.74 and consolidating in the range between 1,772.95 and 1,777.16.

At the U.S. data front, the report of NFP showed that the U.S. economy built 4.8 million jobs in June against market expectations of 3 million. Whereas, the previous month's reading was also recovered higher to +2.699 million as against 2.509 million reported earlier. In the meantime, the unemployment rate dropped more than expected to 11.1% from 13.3% previously, which boosted the investor's confidence as they believe that the worse of the coronavirus pandemic was behind us.

At the China data front, China reported a Caixin Services Purchasing Manager's Index (PMI) of 58.4 for June on the day, which surpassed the previous month's readings of 55. Let me remind you; this was the highest PMI reading in two months.

On the other hand, the optimism about the positive results from the potential COVID-19 vaccine has remained supportive of the market mood, which tends to weaken demand for traditional safe havens and exerted some pressure on the yellow metal. Apart from this, the on-going concerns over a second economic lockdown in the U.S. due to an increased number of confirmed coronavirus cases assisted the yellow-metal move higher.

As per the latest report, the United States reported record coronavirus cases for the 3rd-straight day on Thursday with 52,789 latest numbers. In the meantime, Florida reported 10,109 new cases, while Texas recorded 7,915 new cases during the previous day. The record hike in the virus cases urged the Trump administration to think about the second economic lockdown, which weighed on the economic sentiment. However, this intensifying pandemic situation helped gold find demand in the market.

At the Hong Kong front, the on-going tussle between the United States and China over the Hong Kong security law got an additional boost as U.S. Secretary of State Mike Pompeo recently criticized China's Communist Party's (CCP) decision on the Hong Kong security law by tweeting during the early Friday morning in Asia. As per the tweet, "The CCP implemented its national security law on Hong Kong, in violation of the commitments it made to the Hong Kong people– and disregarding Hong Kongers' human rights and fundamental freedoms.

Looking forward, the traders will keep their eyes on Hong Kong and virus updates. In the absence of U.S. players due to the Independence Day long weekend, the global markets may witness a dull trading session ahead.

Daily Support and Resistance

S1 1726.83

S2 1749

S3 1762.59

Pivot Point 1771.17

R1 1784.76

R2 1793.34

R3 1815.51

The gold technical side hasn't improved a lot. Gold is consolidating in a wide trading range of 1,777 to 1,766 levels. Technically, the bullish trendline on the hourly timeframe is maintaining the bullish bias in gold. On the downside, support for gold predominates at 1,759 and 1,749 marks. On the other hand, a bullish violation of the 1,773 marks could prolong the buying trend to 1,789. Let's look for buying trades over 1,778 level to target 1,787 level. Good luck!

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