Gold Technical Report: Gold prices witnessed a correction yesterday after 4 days of continuous rally due to profit booking by some investors as it has recently recorded an intraday high of the last 6 months. Gold has strong support at 200 DMA at 1778. The rally continues strongly after it has overcome the important psychological 1800 mark. The Medium term support stands at 50 DMA @1761 below which the trend may turn bearish. The short-term Stochastics Oscillator is at 62 and Relative Strength Index is at 60.
Silver Technical Report: Silver prices, have seen 2 days of back-to-back selling pressure, but it can be viewed more as a consolidation of the uptrend. The medium-term trend looks up as the prices continue to trade above 200 DMA @21.08. As 50 DMA @22.11 has crossed above 200 DMA on daily charts, further fire-up in the rally is expected. The Short term Stochastics Oscillator is at 16 and the RSI momentum is near 52.
Fundamental Report: The ADP jobs number came out on Thursday, suggesting that the economy is still overheating in the United States and that the Federal Reserve still has a lot of work to do. That being said, it’s worth noting that the ADP tends to be noisy, to say the least, so, therefore, we could get a huge surprise in the opposite direction., Breaking four consecutive days of gains, gold prices declined today by $20 as market participants reacted to data revealing that the U.S. labor market is tighter than previously perceived. A tight labor market raises the expectations that the Federal Reserve will maintain the elevated interest rates for a longer period. The expectations that the Fed will continue its extremely hawkish monetary policy throughout the entire calendar year have diminished the hope of easing by the Federal Reserve. The vast majority of gold’s price decline today was directly attributable to dollar strength. The U.S. dollar index is currently up 0.85% and fixed at 104.91. Considering that gold is trading 1.11% lower indicates mild selling pressure combined with dollar strength led to gold’s first daily price decline this year.
Investors are looking for a buying opportunity on signs of a bounce. That could be a situation where the move happens early next week unless of course the jobs number completely turns around the idea of a heated-up employment market on Friday. Major economies such as the UK and Eurozone are believed to be already going through an economic contraction. The US – the world’s largest economy – is expected to experience a downturn later this year.