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Gold reaching for new yearly highs – NFPs as a short-term brake pad?

June 07, 2019 10:00

Economic events calendar

Source: Economic Events 7, 2019 - Admiral Markets' Forex Calendar

In our technical piece for Gold last Monday, we pointed out that, by "[…] reconquering 1,310 USD into the start of the week, further gains up to 1,325 USD are to be expected. Still, we only see this level as a potential stop-over up to the current yearly highs of around 1,347 USD.[…]"

And in fact, the precious metal went to 1,325 USD on Monday, with further gains up to 1,337 USD and trading in striking distance of the current yearly highs around 1,347 USD.

Those, who didn't trade the direct break above 1,310 are currently waiting for a pullback to happen where today's NFPs are a potential trigger event.

After the latest economic releases with the ISM Manufacturing and ADP data sets coming in below expectations, and FED chairman Powell opening the door for a potential rate cut on Tuesday, any positive NFP reading today (NFPs > 200k and Average Hourly Earnings (MoM) ≥ 0.3%) leaves Gold vulnerable to a short-term correction.

Even though we do not necessarily see Gold dropping over 1% on a solid NFP reading, a re-test of 1,325 USD or a little lower around 1,310 USD can be seriously considered a potential long-trigger targeting to anticipate a break to new yearly highs and an attack at the strong resistance zone around 1,360/370 USD.

In general, the bullish picture in Gold on a daily time-frame stays active as long as we trade above 1,266 USD:

Gold index daily chart

Source: Admiral Markets MT5 with MT5-SE Add-on Gold Daily chart (between March 7, 2018, to June 6, 2019). Accessed: June 6, 2019, at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of Gold fell by 1.7%, in 2015, it fell by 10.4%, in 2016, it increased by 8.1%, in 2017, it increased by 13.1%, in 2018, it fell by 1.6%, meaning that after five years, it was up by 6.4%.

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