Gold Seeks Next Direction Post NFP Data

Gold prices immediately retreated after the latest official US labour market data, which revealed 390K jobs were added in May, more than the expected 325K. Markets witness a hawkish reaction to the data, with US Treasury yields and the US dollar rising. The yield on the US 10-year note was last up about 6 bps and back near the 3.0% level.

The Gold Index fell back to the $1860 territory from pre-data levels in the upper $1860s, so, it now trades lower by about 0.5% on the day, having hit multi-week highs near $1875 earlier in the session. Still, the precious metal remains on course to post a modest weekly gain of about 0.3% after finding support earlier in the week upon a dip back to its 200-Day Moving Average in the $1840 area.

Given that the latest US jobs data also revealed an easing of US wage pressures last month, some gold bulls might see the latest pullback as an opportunity to add to long positions and target a retest of weekly highs.

Analysts billed the wage metrics in this month’s jobs report as the most important, given the Fed’s focus on inflation. Gold traders should look out for the upcoming release of US ISM Services PMI survey data for May at 1400GMT and remarks from Fed Vice Chair Lael Brainard shortly

Gold price has remained on track to close the third straight week higher. However latest price action suggests that the Gold Index could find relative difficulty to make a decisive move in either direction unless it breaks out of the $1,840 – $1875 range

The $1,850 level aligns now as interim support before $1,840 (200-day SMA). In case the latter turns into resistance, this could be seen as a significant bearish development and attract sellers. In that scenario, additional losses toward $1,830 (June 1 low) could take place.

The Fibonacci 38.2% retracement of the latest downtrend seems to have formed stiff resistance at $1,875. With a daily close above that level, gold could target the $1,890/$1,900 area (100-day SMA, 50-day SMA, Fibonacci 50% retracement) and $1,915 (Fibonacci 61.8% retracement) afterwards.