extending the impressive streak to 14 consecutive beats. However, when we look
closely at the report, the specific details weren’t very positive. The
unemployment rate experienced a significant increase from 3.4% to 3.7%, marking
the largest month-over-month rise since the pandemic began. Additionally, the
average number of hours worked per week slightly decreased, which is often an
indication that employers are preparing for potential layoffs.
Overall, the report
provided something for everyone to interpret. Optimists saw solid job growth
but also recognized that the higher unemployment rate and soft average hourly
earnings could indicate a less tight labour market, potentially reducing
inflationary pressures. The decrease in average weekly hours worked might be
seen as a return to the pre-pandemic trend.
On the other hand, pessimists
focused more on the specific details rather than just the headline number since
trends are generally more important than absolute figures.
Yesterday, the US ISM Services PMI came in much lower than expected at
50.3, narrowly missing the contraction territory. The employment sub-index fell
into contraction, and the prices paid sub-index decreased substantially,
returning to the level observed in May 2020. As a result, the market adjusted
its expectations for further rate hikes from the Fed on the dovish side.
Gold Technical Analysis –
Daily Timeframe
On the daily chart, we can see that gold has
recently bounced from the key trendline and the
50% Fibonacci retracement level.
The rally found resistance at the red 21 moving average where the sellers
pushed the price back towards the trendline. The moving averages are
still crossed to the downside so the bias remains bearish, but given the recent
disappointment in the US data we may expect more upside from here as the market
reprices rates expectations on the more dovish side. If the price breaks below
the trendline, it will open the door for a selloff into the 1800 level.
Gold Technical Analysis – 4
hour Timeframe
On the 4 hour chart, we can see that the resistance at 1984
stalled the rally in gold and the price sold off in the aftermath of the US NFP
report. This was a curious reaction given that rates expectations were lowered
and the details in the report weren’t that good. Nevertheless, gold found
support again at the trendline and rallied yesterday as the US ISM Services PMI
missed expectations. The price is now finding resistance at the red 21 moving
average, but if the price breaks above the recent high at 1964, we should see
another test of the 1984 resistance.
Gold Technical Analysis – 1
hour Timeframe
On the 1 hour chart, we can see more
closely the short-term price action and the 1964 high being the key level to
break for the buyers to extend the rally towards the 1984 resistance first and
make new higher highs next. The sellers, on the other hand, will want to see
the price breaking lower and ultimately get lots of conviction if gold breaks
below the 1934 support zone.
This article was written by ForexLive at www.forexlive.com.
