Gold and Silver both saw some bullish momentum yesterday after weak private labor market data fostered investor optimism regarding potential Federal Reserve intervention to lower interest rates later in the year.
This data signals ongoing weakness in the labor market, potentially providing the Federal Reserve with the necessary impetus for rate adjustments. Investor confidence has increased as a result of the data as according to the CME FedWatch tool.
Over 65% of traders now anticipate the Fed will lower the benchmark rate at their September meeting, up from less than 50% a week ago. A rebound in crude oil prices today and a dip in U.S.
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Treasury yields this week are bullish outside market elements supporting the precious metals markets at mid-week. The Labor Department’s May employment situation report is expected on Friday, and the market, especially metals traders, is waiting for the U.S. data point of the week.
In contrast to the April report that showed a gain of 175,000 jobs, the crucial non-farm payrolls statistic is seen increasing by 178,000. Investors and traders are also anticipating Thursday’s European Central Bank (ECB) meeting.
The expectation is that the ECB will get ahead of the central-bank pack and cut its main interest rate by 25 basis points. If this happens then EURO will slide which will make USD gain and we will see decline in Gold and silver.
August gold bulls have the overall near-term technical advantage. However, a bearish double-top reversal pattern has formed on the daily bar chart to suggest a near-term market top is in place. Bulls next upside price objective is to produce a close above solid resistance at the contract high of $2,477.
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Bears next near-term downside price objective is pushing futures prices below solid technical support at the May low of $2,300. In MCX, the key support for gold is 70,000 while key resistance is at 74,000.
The momentum oscillator RSI_14 is bullish as it is trading at 58 while price action is also trading above its 5 and 21-day EMA. Any dips around 72,000 is buying opportunity with stoploss of 71,200. Bearish trend is only anticipated if Gold breaches $2,300 and 70,000 levels.
(Disclaimer: Bhavik Patel is a Senior Commodity/Currency Research Analyst at TradeBulls Securities. Views, recommendations, opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)
