Gold – XAU/USD Analysis – July 02, 2021

Big Day – Eyes on NFP Figures!

Gold was closed at $1776.05 after placing a high of $1783.30 and a low of $1766.00. Gold extended its gains for a second consecutive session on Thursday as a more than 7% slide in June pushed traders to buy yellow metal amid concerns over the Delta variant of the coronavirus. However, these moves were also capped by the caution over the U.S. payroll data and a strong U.S. dollar.

The U.S. Dollar Index rose on Thursday as it continued its bullish streak for the 7th consecutive session and reached 92.60 level, its highest since April 06. The greenback remained strong across the board despite poor than expected ISM Manufacturing PMI data that helped yellow metal remain green for the day. However, the fears that the delta variant of the coronavirus was spreading fast across the globe raised concerns over economic recovery, and the safe-haven appeal emerged in the market that also supported the gains in yellow metal on Thursday.

On the data front, at 16:30 GMT, the Challenger Job Cuts for the year dropped to -88.0% compared to the previous -993.8%. At 17:30 GMT, the Unemployment Claims from last week declined to 364K against the expected 388K and supported the U.S. dollar, and capped further gains in gold. At 18:45 GMT, the Final Manufacturing PMI declined to 62.1 against the forecasted 62.6, weighed on the U.S. dollar, and pushed yellow metal higher. At 19:00 GMT, the ISM Manufacturing PMI also reduced to 60.6 against the projected 61.0 and weighed on the U.S. dollar and added further gains in gold. Construction Spending fell to -0.3% against the forecasted 0.4% and weighed on the U.S. dollar, and pushed gold prices higher. ISM Manufacturing Prices raised to 92.1 against the predicted 86.0 and supported the U.S. dollar. Wards Total Vehicle Sales also dropped to 15.4M against the projected 16.9M and weighed on the U.S. dollar and added further upside momentum in gold.

In June, gold posted its biggest monthly loss since November 2016, which is driven by the surprise hawkish tone from the U.S. Federal Reserve. Rising interest rates increase the opportunity cost of holding non-yielding bullion that added pressure on the yellow metal.

This week, the focus of investors has remained on Friday’s non-farm payrolls report as it will provide clues on the timeline of the U.S. monetary policy shift. Federal Reserve officials have suggested that the central bank keep an eye on economic data to determine the tapering in asset purchases this year. The Reuters poll has predicted that this month there will be an addition of over 690,000 jobs, and if the expectations came true, then the dollar might see more strength.

Gold Intraday Technical Level

Support Resistance

1766.94 1784.24

1757.82 1792.42

1749.64 1801.54

Pivot Point: 1775.13

Gold - XAU/USD - Technical Outlook

On Friday, gold is trading sideways in between a tight trading range of 1,796 – 1,770 levels. It’s going to be a big day for gold as the U.S. economy is due to release its unemployment rate and non-farm payroll data. These two figures are the most-awaited and high-impact economic events as these typically drive massive price action in the market. The same we can expect today. On the 4 hour timeframe, gold is facing resistance at the 1,778 level that’s being extended by a downward trendline.

In contrast, the support level continues to hold around 1,770 levels. The bearish breakout of 1,770 exposes the metal towards the next support level of 1,753 level. The MACD is about to show a bullish crossover, and if this happens, the gold price will be exposed towards the next resistance are of 1,796. All the best!