Traders focus on upcoming US employment data

The Gold market continued its ascendance in the past days as traders are evidently turning towards the riskier instruments during the challenging economic times we are going through. This week’s report will focus on the fundamentals supporting the Gold market’s current trend and what the chances are for the trend to reverse. Upcoming economic releases that could create volatility will also be discussed while as a closure we will provide an indicative technical analysis identifying important levels and scenarios. Overall we aim to provide a short yet informative Gold report for our followers.

To start with, one of the major reasons that is supporting Gold’s price at the moment is probably economic data released in the past week. The Core PCE Prices rate which measures the changes in the price of goods and services purchased by consumers for the purpose of consumption, excluding food and energy came in bigger than expected and bigger than the previous figure. Inflation measures are a very important indicator for any economy. Higher inflation is among the top drivers for Gold’s price as the yellow metal can be used as a measure to counter higher good prices. Thus headlines on higher inflation tend to motivate Gold traders significantly.

Reference to notable higher inflation was made by the Fed’s Vice Chair for Supervision Randal K. Quarles in the Economic Outlook and Monetary Policy report released on the 26th of May noting “Inflation is running significantly above the Federal Reserve’s longer-run goal of 2 percent primarily as a result of factors like the surge in demand as more services come back on line while goods spending remains robust, the emergence of bottlenecks in some supply chains, and the very low inflation readings recorded last spring dropping out of the calculation of 12-month inflation. We must say that during the last weeks in May, Gold’s upward movement steepened as more inflation worries were placed by important economic figures in the US.

Moreover, in the following days important economic data from the US could be ringing alarms for traders as they could be presenting new opportunities and interest for analysts. On the 3rd of June a rather pact economic calendar is available with the weekly initial Jobless Claims figure, the Final Markit Services & Composite figures for May to be released, and the ISM Services PMI for May also. On Friday the star of the current week calendar is the US employment report for May with the NFP figure, the Unemployment Rate and the Average Earning figure all to be released in the European afternoon. Traders should be cautioned for Friday’s Employment report as we have seen Gold’s capacity to make large abrupt movements come into play unexpectedly during previous releases. Overall the event can produce significant market volatility across the board that could even be stretched into the following week thus in our opinion Friday requires special attention. On the 4th of June we also get the Factory Orders figure for April. Finally on the 8th of June we get the International Trade figure which can also be enticing for Gold traders at this stage.

Análise técnica

XAU/USD daily chart

It is extremely evident that the upward momentum was intensified in the past week with only 2 out of 14 daily sessions seeing a minor decrease in price, while all the others were in green territory. At the moment Gold has stabilized above our (S1) 1900 support and has even briefly reached 1910. If the gradual ascending is to continue then the (R1) 1925 could be met first, second comes the (S2) 1940 line and third is the highest level for this report which is noted at (R3) 1958 line which was last seen briefly in January. In the interest of the sellers, if the metal moves lower, then the round number (S1) 1900 support could be tested first. Lower the (S2) 1885 level may be the seller’s choice as it was briefly tested during Friday the 28th but the market quickly rebounded higher. This could be considered the most important support level as it was tested as a resistance and then as a support in that past days indicating that traders respect the line. Even lower the (S3) 1860 support may also be a target for the bears. The RSI indicator below our chart has a steady rising line formed surpassing the 75 level which implies that some correction could be imminent.

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