Gold
Gold prices have started the week on a softer footing following the volatility last week. The rally in the safe haven asset was put to an end on Thursday by a stronger-than-expected ADP employment release which lifted expectations ahead of the NFP, sending USD higher and gold lower. However, the ADP release proved to be unreliable as a proxy with the headline NFP release undershooting expectations. At 559k, jobs growth was above the prior month’s 266k reading (revised higher to 278k), though below the 645k forecast.
Despite the headline miss, the unemployment rate reduced further than expected to 5.8% from 6.1% prior (5.9% expected), while the average hourly earnings figure came in at 0.5%, beating expectations of a 0.2% reading.
In all, the release was broadly positive though this the miss on the headline reading means that expectations of any imminent tightening in Fed monetary policy have been delayed. On the back of the release, the Dollar outlook remains mostly subdued, meaning that gold prices should stay supported for now.
Looking ahead this week, the big data focus will be the US CPI print on Thursday. Following the large jump in April, if the May reading comes in above expectations, this could change the dynamic, sending USD higher and gold lower. A miss, on the other hand, should see gold prices continue higher.
Silver
Silver prices continue to oscillate around USD and equities flows and movements in the gold markets. The recent downside has been offset by continue strength in equities markets which, while at current levels, should prevent any deeper move lower for silver. The potential for a stronger USD on any upside inflation surprise this week is noted though, for now, the reversal lower in USD following last week’s NFP release means silver should remain above the local support level.
Technical Views
Gold
The reversal in gold from the test of the 78.76% retracement, bull channel top and 1919.92 resistance has stalled for now with the channel low providing support. Though MACDS has turned bearish here, and RSI is pointing lower, the near-term outlook remains bullish while the 1850 level holds. Below there, 1826.71 is the next support to note.
Silver
The recent breakdown below the rising channel has seen silver prices supported into the 27.4502 level. MACD has turned bearish here, highlighting downside risks on a break of the support. Below there, 26.5711 is the next level to watch.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.