Gold Price Analysis: XAU/USD nears five-week low, under $1,700, amid broad risk-on sentiment

Gold prices struggle to extend recoveries from $1,670.76, lowest since May 01.
Market’s risk-tone boosted after the US employment data flashed positive surprises.
US-China tussle remains but optimism over economic restart gains major attention.
Japanese data decorates the Asian calendar, qualitative headlines to keep the driver’s seat.

Anil Panchal FXStreet

Gold prices take rounds to $1,685.13 at the start of the week’s trading. Despite being above Friday’s low of $1,670.76, the bullion nears the lowest in more than a month as safe-havens remains offered amid broadly upbeat trading sentiment.

Read: What you need to know as markets open: Risk-on as investors cheer astonishing NFP

Friday’s US employment numbers hinted that the coronavirus (COVID-14) impact on the jobs market could be temporary and that the global economies could recover quickly. The headlines US Nonfarm Payrolls (NFP) rose 2.5 million versus expectations of -8 million. Further, the Unemployment Rate also added to the optimism by 13.3%, lesser than the 19.8% forecast.

While the news boosts overall market mood and propelled Wall Street after the release, it also offered strength to the US dollar in recovering from multi-day lows, which in turn added weakness onto the yellow metal. It’s worth mentioning that the US 10-year Treasury yields added over seven basis points (bps) to 0.893% at the end of Friday’s closing.

During the weekend, China released May month trade numbers while posting the biggest trade surplus despite the pandemic. The $62.93 billion of Trade Surplus, against $39 billion forecasts, seems to have been majorly boosted by the medical exports. Details suggest that the Exports have been down 3.3%, versus -7.0% market consensus, whereas Imports dropped heavily below -9.7% expected to -16.7%.

Other than the data releases, receding protests in the US and a probable merger between the drug majors AstraZeneca and Gilead also add to the market’s upbeat sentiment. Even so, the US-China tussle and an uneven pattern of virus cases in the US still keep the fear on the desk.

Looking forward, Japan’s second reading of the first quarter (Q1) 2020 GDP, expected to have recovered from -0.9% forecast to -0.5%, will offer immediate direction. Though, the major attention will be given to qualitative catalysts for fresh impetus.

Technical analysis

FXStreet’s Ross J Burland suggests that the bears are taking control with $1,620 being the downside target:

With the price now in a confirmed bearish trend, according to MACD, bullish corrections would be expected to be short-lived while respecting the resistance structure around 1700. Further extensions are expected towards the next major support level and higher volume-profile nodes in the 1620/40s.

Additional important levels

Overview
Today last price	1685.13
Today Daily Change	0.00
Today Daily Change %	0.00
Today daily open	1685.13

Trends
Daily SMA20	1722.01
Daily SMA50	1697.49
Daily SMA100	1642.4
Daily SMA200	1569.59

Levels
Previous Daily High	1716.59
Previous Daily Low	1670.76
Previous Weekly High	1745.12
Previous Weekly Low	1670.76
Previous Monthly High	1765.38
Previous Monthly Low	1670.72
Daily Fibonacci 38.2%	1688.27
Daily Fibonacci 61.8%	1699.08
Daily Pivot Point S1	1665.06
Daily Pivot Point S2	1645
Daily Pivot Point S3	1619.23
Daily Pivot Point R1	1710.89
Daily Pivot Point R2	1736.66
Daily Pivot Point R3	1756.72

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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