· Gold fades for third straight week on economic recovery hopes
· Gold eased ahead of a highly awaited U.S. jobs report on Friday as markets pinned hopes on an economic recovery, putting the safe-haven metal on track for a third consecutive weekly decline.
Spot gold was down 0.2% at $1,706.91 per ounce as of 0324 GMT. U.S. gold futures slid 0.7% to $1,714.50.
Bullion has declined about 0.8% so far this week, which could be its biggest fall since the week ending May 1.
· “Gold prices have been under pressure after a miraculous stock market run that seems to be showing some signs of plateauing,” said Edward Moya, a senior market analyst at broker OANDA.
· Asian equities eased from multi-week highs, but were, however, poised for their biggest weekly rise in over eight years.
· Investors now wait for the U.S. nonfarm payrolls data for May due at 1230 GMT, which is likely to show payrolls falling by 8 million after a record 20.537 million plunge in April, as per a Reuters survey.
· Gold seems ready to climb higher, as the dollar is weakening, trade tensions are here to stay, there are risks of a second coronavirus wave, and the European Central Bank (ECB) showing it can still surprise markets, Moya added.
· The ECB on Thursday approved a larger-than-expected expansion of its stimulus package.
· U.S. Federal Reserve’s two-day policy meeting next week is also on investors’ radar. The U.S. central bank has injected massive stimulus and cut interest rates to near zero to cushion the blow from the coronavirus pandemic.
More stimulus and lower interest rates tend to benefit gold, which is often seen as a hedge against inflation and currency debasement.
· Gold Price News and Forecast: XAU/USD at crucial corrective levels, traders now looking to market risk profile
Gold Price Analysis: XAU/USD stays pressured below 200-bar SMA, $1,705 in focus
Gold prices decline to $1,709.34, down 0.27% on a day, during the pre-European session on Friday. In doing so, the yellow metal extends its pullback moves from 200-bar SMA, which in turn portrays the bullion’s weakness.
However, an ascending trend line from Wednesday, currently near $1,705, restricts the precious metal’s additional declines. In a case where the bears dominate past-$1,705, the monthly low near $1,689.50/45 and the May month’s low near $1,671/70 could return to the charts.
Meanwhile, an upside clearance of 200-bar SMA, at $1,718 now, isn’t going to trigger the commodity’s rally as a downward sloping trend line from May 18, near $1,741, might question the buyers past-$1,718.
Gold at crucial corrective levels, traders now looking to market risk profile
Gold prices stabilised and rallied beyond $1,710 resistance to a high of $1,722 with some volatility on the grind higher overnight. European traders set the bullish theme for New York to take over the baton and finish off the job. Now it is a question of whether the risk-on mood can continue to fuel the next leg to the downside for gold prices.
At the time of writing, the yellow metal trades at $1,715 within a narrower range to start the day of between $1,713 and $1,716. Looking to the usual suspects, the US dollar is stalling with 97.20 to the upside on the cards at this rate. Also, US stocks are running out of steam ahead of both the weekend and the Nonfarm Payrolls data. We could see some capitulation here of speculative positions which could well be gold's saving grace at this crucial juncture.
· How will Friday’s reading affect gold prices?
There is no clear long-term relationship between the gold price and job report. However, if the reading surprises investors, gold could move violently in the short term. Usually, good news for the U.S. labor market is positive for the greenback and negative for the shiny metal. In such a case, the price of gold tends to fall on the day when the Nonfarm Payroll Report comes out.
More importantly, how investors react depends on the report’s implications for the short-term interest rates. However, these are not normal times.
Gold has lately been trading around the mid $1720 levels, giving up all its recent gains in trading at the start of this week as surging recovery sentiments, and no new US-China trade developments saw investors reduce haven positions.
Assuming the global recovery rally maintains its strength in other markets, gold looks increasingly likely to return to the lower end of its recent $1688.00 to $1650.00 range. Struggling bullish gold traders can take some comfort in the fact that momentum remains weak in either direction. Thus, at this time a large downside breakout is as unlikely as a large topside one.
· In other metals, palladium rose 0.3% to $1,938.99 per ounce, and platinum climbed 0.2% to $838.37.
· Silver was down 0.4% to $17.66, and was set for its first weekly decline in five.
Reference: CNBC,FXStreet,Equiti
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