Gold prices rose to a high of USD 1219.4/Oz levels this week and appears poised to end higher for the second consecutive week.
The metal shot higher from the low of USD 1142.6/Oz, after the surprisingly dovish Fed policy statement was released in the last week. The resulting weakness in the US dollar, which got amplified by short covering in the EUR/USD pair helped the yellow metal rise to a high of USD 1219.4/Oz.
However, we are down to USD 1200/Oz levels as we head closer to the end of trading this week. In the last two trading sessions of this week, we saw the US dollar rebound, mainly on account of a drop in the weekly jobless claims data to a six-week low. The better-than-expected UK services PMI data also helped the greenback recover lost ground. In the process, gold was pushed lower to USD 1200/Oz. The risk aversion in the equity markets and the geopolitical uncertainty in the middle east also eased.
During the next week, we have the US non-farm payrolls data for March due for release. Apart from the Fed’s concern regarding the US dollar, this is the single data piece that could alter the rate hike expectations significantly. Investment bank Goldman Sachs already called a top in the payrolls figure, indicating the pace of job additions could slow down in the future.
Gold range USD 1180-1225 ahead of NFP
Prices are likely to trade in the range of USD 1224.9 (50% Fib retracement of 1307.3-1142.6) – USD 1181.4 (23.6% Fib retracement) ahead of the Friday’s Non-farm payrolls report.
The losses could be restricted at USD 1181.4-
• Though we have seen a rebound in the USD, a significant appreciation can be ruled out as the treasury yields are likely to remain weak on the Fed’s weak growth forecasts and due to the weaker-than-expected Q4 GDP data.
The equity markets are unlikely to see a sudden rise in risk-on sentiment as investors stay cautious ahead of the NFP report. Thus, Gold could remain supported amid caution ahead of NFP.
The disappointing Chinese final PMI readings for March could support the yellow metal.
Safe haven flows may increase if Greece issue or tensions in middle east escalate further.
On the other hand, gains could be restricted at USD 1224.9-
The European Central Bank, at its April meeting, is likely to sound optimistic regarding the recovery in the Eurozone economy. Meanwhile, another disappointing figure of weekly bond purchases by the ECB could also restrict gains in the yellow metal.
The repeated failure in the EUR/USD and the GBP/USD around 1.10 and 1.5 is likely to keep the USD strong. Moreover, the upbeat Eurozone final PMIs may not be sufficient to push the USD significantly lower.
Caution ahead of the Non-farm payrolls report, which has beat estimates by a wide margin on the last few occasions- will keep big traders on the sidelines ahead of the report.
A breakout from the range is anticipated post the release of Friday’s non-farm payroll report. A weaker-than-expected figure – below 230K could push Gold well above USD 1224.9/Oz by Friday’s New York closing. We can expect the metal to test and consolidate around the 61.8% retracement at USD 1244.3/Oz.
On the other hand, another stellar jobs report, could push the metal below USD 1181.4/Oz. However, the bearish interest rate forecasts and the downward revisions of the growth forecasts are likely to restrict losses around USD 1165-1170/Oz levels.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD: Extra gains in the pipeline above 0.6520
AUD/USD partially reversed Tuesday’s strong pullback and regained the 0.6500 barrier and beyond in response to the sharp post-FOMC pullback in the Greenback on Wednesday.
EUR/USD meets support around 1.0650
EUR/USD managed to surpass the key 1.0700 barrier in response to the intense retracement in the US Dollar in the wake of the Fed’s interest rate decision and Chair Powell’s press conference.
Gold surpasses $2,300 as Dollar tumbles
The precious metal maintains its constructive stance and trespasses the $2,300 region on Wednesday after the Federal Reserve left its FFTR intact, matching market expectations.
Bitcoin price reclaims $59K as Fed leaves rates unchanged
The market was at the edge of its seat on Wednesday to see whether the US Federal Reserve (Fed) would cut interest rates during the Federal Open Market Committee (FOMC) meeting.
The market welcomes the Fed's statement
The market has welcomed the Fed statement, and the S&P 500 is higher in its aftermath, the dollar is lower and Treasury yields are falling. There is still only one cut priced in by the Fed.