Gold – XAU/USD Analysis – June 30, 2021

ADP Non-Farm Employment Change In Focus!

Gold prices were closed at $1761.65 after placing a high of $1778.95 and a low of $1750.20. Gold extended its loss on Tuesday and dropped to its lowest level since April 15 amid the strength in the U.S. dollar. The greenback was strong across the board ahead of the release of this week’s U.S. jobs report, which is expected to come in positive and could support the recent hawkish stance by the Federal Reserve. The anticipations of better-than-expected jobs data added to the strength of the U.S. dollar.

In its June policy meeting, the Federal Reserve signalled that it would likely opt for two hikes in interest rates before the end of 2023. The rates are expected to be increased to 0.6% from the current level of 0.25%. This will be the first interest rate hike since the outbreak of the coronavirus pandemic in March 2020. Another significant change that Fed mentioned in its June policy meeting was the potential pull back on the $120 billion of monthly asset purchases by the central bank to support the economy. Although Fed officials had mixed signals about the tapering of asset purchases, the fact alone that it was being discussed in the policy meeting was enough to support the greenback prices, which ultimately weighed on the yellow metal.

On the data front, at 18:00 GMT, the Housing Price Index for April rose to 1.8% against the projected 1.5% and supported the U.S. dollar that added further loss in gold prices. The S&P/CS Composite-20 HPI for the year remained flat with expectations of 14.9%.

Meanwhile, the investors were awaiting the U.S. Labour Department’s Non-Farm Payrolls data scheduled for Friday. The data is expected to show a hike of 690,000 jobs this month compared to the previous 559,000. The data will follow the comments from Richmond Fed President Thomas Barkin, who believes that the central bank had made substantial further progress in its inflation goal to start tapering asset purchases.

According to officials, the United States has lost more than 21 million jobs at the peak of business lockdowns induced to curb the effects of the coronavirus between March and April 2020. Although a significant part of job loss has been recovered, about 8 million are left to recover.

Meanwhile, the U.S. dollar was also strong across the board because of the safe-haven buying prompted by the fears of the new outbreak of the highly contagious Delta variant as it could disrupt the ongoing economic recovery. As in result, the global equity edged lower on Tuesday and helped the U.S. dollar gather strength that ultimately weighed on the yellow metal.

Gold Intraday Technical Level

Support Resistance

1748.25 1777.0

1734.85 1792.35

1719.50 1805.75

Pivot Point: 1763.60

Gold - XAU/USD - Technical Outlook

The precious metal gold has finally exhibited a strong price action, disrupting the support level of 1,765. Now it’s trading at 1,761 level, having bounced off over the support level of 1,751 level. Continuation of a selling trend can expose gold price towards the next support level of 1,748. The MACD is closing histograms below 0 points, supporting the selling trend, while the 50 periods moving average is also holding below 1,761 level. Gold\s next support stays at 1,749 and 1,734 levels. On Wednesday, the investor’s focus will remain on the U.S. ADP Non-Farm Employment Change as this has the potential to drive sharp price action in the market. Good luck!