Gold prices prolongs its long run of losses and sits at fresh four month lows near 1161 levels as markets have already priced-in to some extent a astronger than expected reading of NFP as also a slide in unemployment rate. Most Wall Street analysts believe that a healthy 233,000 increase in payrolls in June would be enough to push the jobless rate back to the six-year lows of 5.4% first seen in April this year. This data is considered as the most influential data as it is closely watched by the Federal Reserve (Fed) and hence may provide fresh hints on the timing of Fed rate lift-off. The payrolls report is coming a day earlier than usual, as US stock markets will be closed on Friday for the Independence Day holiday.
Research Team at TD Securities noted,"The market consensus has drifted higher to 233,000 from 230,000 earlier this week, and we suspect that unofficial market expectations now lie closer to the 240,000 mark,"
More so, the latest ADP employment data released on Wednesday, a forerunner for NFP, put up a better show with the headline ADP print reflecting 237,000 jobs creations in May, opposed to 219k expectations. Market participants now gear up for a volatility outburst later in the US session as it is usuallu expected that NFP may create volatility, having major impact on the US dollar moves.
Technically, on daily charts, gold has breached the descending traingle support, giving a bearish breakout. Moreover, the daily RSI at 34 aims sharply lower, although in an extreme oversold region. Also, there is a moving average crossover between the 10-DMA and 20-DMA while MACD also remains below the signal, bolstering the case for further downside. Hence, the pair is exptected to test 1150 – psychological levels on better than expected non-farm payrolls data from the US. A break below the last, selling pressure is likely to intensify dragging the pair to 1146 -1142 next support zone. On the contrary, a big miss on the NFP print or if the figures come in line with expecatations, the DXY coud drop to 95 levels, fuelling a sharp rebound in gold towards the crucial 1180 levels and beyond.
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