XAU/USD pair – Daily Chart
Gold prices in terms of US dollar (XAU/USD) extended previous losses and dropped nearly $ 15 on Thursday to fresh monthly lows at 1172.85, displaying an ascending channel breakout to the downside as anticipated. The pair plunged sharply from 1186.27 highs on the back of a strong rebound in US dollar following better than expected US weekly jobless claims data which added to the positive ADP and trade data releases. The recent streak of upbeat US fundamentals backs case for Fed rate hike as early as this Sept, dulling gold’s allure as an alternate higher yielding asset.
As for today’s trade so far, XAU/USD trades below the channel trend line support-turned resistance located at 1177.30. The pair seems to consolidate heavy losses witnessed yesterday and remains cautious ahead of the key US non-farm payrolls report due later in the US session, which may provide further USD moves. May's non-farm payrolls are expected to print a slightly improved figure of 227,000 after 223,000 booked in April. Hence, further direction on the yellow metal prices will shape up only on the data release.
The daily RSI at 38 has turned slightly flat which also suggest lack of clear direction ahead of the key US jobs data. Traders refrain from creating fresh positions before this data, as its release mostly creates unusual volatility. In case the data beats estimates, we could USD bulls extending higher, thereby dragging XAU/USD to next support around 1168 levels. A break below the last selling pressure may intensify pushing the pair to fresh three month lows to 1159.50 (March 19 Low) levels. However, if the NFP figures disappoints markets, coming in lower than 227k expectations, then XAU bulls are likely to take over, pushing the pair higher back to 1200 – psychological levels and beyond to 1204-1207 levels.
XAU/EUR pair – Daily Chart
Gold prices in terms of Euro (XAU/EUR) were once again heavily sold-off on Thursday, closing the day lower at 1050.92. As anticipated, the pair tested the trend line support at 1038 levels and bounced-off lows at 1038.97. Subsequently XAU/EUR swung backer higher and regained 1050 – psychological levels at close. The pair dropped sharply during the European hours as EUR/USD extended beyond 1.13 handle underpinned by German yields. However, USD bulls took over later backed by upbeat US macro data, pushing the euro back at 1.12 barrier, providing some respite to XAU/EUR.
At the moment, XAU/EUR trades near lows at 1043 levels, facing rejection at 1051 levels. The pair dived deeper in red as the shared currency regained lost ground, correcting heavy losses seen yesterday. Hence, the pair may once again test the trend line support 1038 levels. The RSI also aims lower and stands in an extremely oversold region at 33 levels. A break below the crucial 1038 support, the pair could drop further to test the 200-DMA located at 1030.77 levels.
However, it is expected that the pair may once again bounce-off the trend line support as the USD bulls will jump back into bids on a better show at NFP later today, dragging EUR lower across the board. In case if this holds true, the pair may rebound higher for a test of 5-DMA resistance located at 1061.45 levels. Overall, the pair is expected to remain supported so long as it holds above 1038 – key support.
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