Daily Report – 03 June 2022

03 June 2022
OTC Market Data
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ISA Bullion thoughts for the day

Technical Report: Gold prices surge and are headed toward the 50-day moving average near 1892. Despite this, this gold faces a bearish bias as Fed rate hikes underpin a stronger dollar, which will cause gold prices to decrease. Support is seen near the 10-day moving average of 1854. Short-term momentum turns positive as the Fast Stochastic generated a crossover buy signal. Prices are neither overbought nor oversold as the fast stochastic prints a reading of 96.13, well above the overbought trigger level of 80. Medium-term momentum turns positive as the MACD generated a crossover buy signal. This occurs as the 12-day moving average minus the 26-day moving average crosses below the 9-day moving average of the MACD line. The MACD histogram has a negative trajectory that points to lower prices. Daily Support/Resistance : CMP: 1856, S3: 1810, S2: 1828, S3: 1840. R1: 1875, R2: 1892, R3: 1910 Fundamental Report: The Gold futures are edging higher on Thursday, supported by a weaker U.S. Dollar, but capped by steady U.S. Treasury yields. The market is also trading higher for the week as investors shrug off higher yields and a surge in the dollar on renewed concerns over soaring inflation and the prospects of aggressive monetary tightening by the Federal Reserve. Some traders are saying the market is getting support from a weaker stock market and worries about a global economic slowdown. At 10:08 GMT, August Comex gold futures are trading $1857.40, up $8.70 or +0.47%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $172.27, up $1.13 or +0.66%. Gold prices continue to rise as jobs data indicated that the economy is headed for a slowdown. traded flat today amid rising yields and the stronger dollar. Slower growth and the Fed’s promise to fight inflation undermine gold prices and boost the dollar. The dollar eased amid risk-on sentiment among investors, causing them to rotate into riskier assets and currencies. Benchmark yields dropped ahead of the unemployment report and nonfarm payroll data released tomorrow. The ten-year yield moved slid by 2.7 basis points to 2.904%. The ADP Private Payroll Report stated that private payrolls rose by 128.000 in May. This reading marks the slowest growth during the pandemic recovery, signaling fears of slowing economic growth. The Dow Jones estimate for private payrolls was 299,000, which was significantly higher than the actual number. Small businesses performed the worst this month, lowering payrolls by 91,000. US jobless claims fell by 11,000 to 200,000 from the previous week. The labor market remains intact and tight as labor supply has matched labor demand. However, demand for labor, which consists of job openings, may ease as the Fed continues to aggressively tighten interest rates. This data comes before tomorrow’s key readings including non-farm payrolls and the unemployment report, which is estimated to come in at 3.5% and will provide insight into the US economic condition. However, a pullback in crude would be crucial for any prolonged risk rally, given implications for inflation expectations. It is otherwise hard to see a meaningful Fed shift in September, not to mention the negative consequences for Europe, with the ECB increasingly vocal on hiking aggressively even though the root causes of inflation in Europe are supply-side and mainly energy.OPEC may suspend Russia from the Oil production deal. And some members in the Persian Gulf are expected to ramp up output increases if the above suspension is carried out -the anticipation of more supply hitting the market, even after cutting Russia out, could be fueling some of this sell-off as oil gave up its post-EU embargo bounce. The OPEC olive branch comes ahead of a potential Middle East leaders’ meeting in late June that is expected to be headed by Biden and would signal US leadership and commitment in the Middle East when the US is seen as withdrawing from the region. Meanwhile, EU members have divisions on the next step after implementing this latest embargo. Belgian PM said it was time to pause as measures targeting Russian gas would be more complicated, but others said they should go for a total energy embargo. After the Fed’s next two meetings, which will likely see 50bp hikes at each, the Fed is then likely to move into ” assessing conditions mode,” which could become the most significant market mover. Any softening of inflation numbers is expected to be the primary source of volatility across asset classes, leading to higher stocks.

Key US Economic Reports & Events
Non-Farm Employment Change
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