· Gold Price Analysis: XAU/USD stays en route $1,777 on NFP day
Gold consolidates the heaviest losses in over a month around $1,795 during early Friday. The yellow metal dropped to a nine-week low the previous day before recovering from $1,785.
While the broad US dollar gains remain on the table, which has been weighing on gold prices off-late, the pre-NFP trading lull seems to challenge the commodity trading by press time. That said, the US dollar index (DXY) rises to a fresh high since December 01 while the market’s risk barometer in Asia, S&P 500 Future, also prints mild gains.
Moving on, the US Nonfarm Payrolls (NFP) and Unemployment Rate for January will be the key for the global markets amid hopes of recovery in the world’s largest economy.
Gold: Key levels to watch
Despite the recent corrective pullback, gold remains below the key resistance area around $1,805, not to mention the adjacent hurdle near $1,797. As a result, sellers are well directed towards Pivot Point 1 support on the monthly chart, near $1,777.
However, the previous day’s low around $1,785 can offer an intermediate halt during the fall. Also filtering the moves could be the third support of pivot on weekly formation around $1,781.
Meanwhile, the previous high on 4H and 15-minutes join 23.6% Fibonacci retracement of the daily chart (1D) to guard immediate upside around $1,797.
Following that, the previous month’s low and SMA5 on 4H join 38.2% Fibonacci retracement level on 1D to highlight $1,804 as the resistance.
It should be noted that the pivot point support two on the weekly chart as well as SMA 100 on 15-minute play strengthens the resistance region around $1,805.
· Gold edges higher but set for weekly drop
Spot gold rises while metal is set for its biggest weekly decline since the week ended November 27
Gold inched up on Friday, recovering from a more than two-month low hit in the previous session, but the precious metal was set for its biggest weekly drop since end-November pressured by a firmer dollar.
“There is some technical rebound as investors think last night’s drop was overdone, but still overall trend in gold remains bearish biased on rising dollar and Treasury yields,” said DailyFX strategist Margaret Yang.
The dollar was set for its best week in three months, while longer-term US Treasury yields rose.
“The economic outlook is definitely brighter with vaccines bringing down the daily Covid-19 infections, and the macro data is improving, undermining the demand for precious metals as a store of value” Yang said.
However, the passage of President Joe Biden’s $1.9-trillion Covid-19 aid will underpin gold. “Gold is about to endure some serious short-term pain,” Jeffrey Halley, a senior market analyst at Oanda said, adding, gold’s role as an inflation hedge will return as the economic recovery starts accelerating by late second quarter.
Spot silver shed 0.1% to $26.27, and was set to end the week lower at 2.6%, hurt by the recent volatility in the market, which also took prices to a near eight-year peak of $30.03 briefly on Monday.
“Silver’s fate will be similar to gold and I expect it to retest $22 over the next two weeks, though it will find some support through Biden’s solar push,” Halley said.
· Gold Price Analysis: XAU/USD correction on the cards towards $1,830
Gold is under pressure as the US dollar catches a bid in a risk-on environment ahead of this week's Nonfarm Payrolls even on Friday. However, there is scope for an upside correction and the following illustrates where the next trading opportunity could arise leading into the event. Gold is on the way to test the bull's commitments at monthly support.
· GOLD TECHNICAL ANALYSIS
Gold prices have slipped back below inflection point support at 1817.13, opening the door for another test of the 1747.74-65.30 area. A daily close below that may set the stage for a probe below the $1700/oz figure. Alternatively, returning back above 1817.13 puts the 1860-71.34 zone back into focus as resistance.
Reference: businesslive, FXStreet, DailyFX
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