Gold has completed a very successful trading week by updating its annual highs against the background of the publication of weak data on the US labor market. All key indicators, including average wages and data on the number of newly created jobs in the non-agricultural sector, turned out to be lower than expected values, significantly weakening the position of the US currency. As a result, the dollar index ended trading with a drawdown of 0.5%. The weak labor market report raised concerns about the weakness of the US economy, which could speed up the decision-making process on easing monetary policy by the Fed.
Today, gold is trading at a decline of more than 1%. There are two main reasons for the development of intraday bearish trends. First, the precious metal has updated the annual maximum, which provoked the fixation of long positions by many investors. Secondly, a serious pressure on the price is exerted by the situation on the stock exchanges. The main index is traded in the green zone, indicating an increase in investors' appetite for risk and, accordingly, a decrease in demand for defensive assets. Thus, investors react to the publication of fairly not bad trade statistics from China, and to the first meeting , since the beginning of May, of the negotiating groups of the USA and China.
Today in the economic calendar there are no more important news that could have a strong impact on gold, therefore geopolitics news and the situation on the stock markets will be the main drivers.
On the graph, the correctional wave is actively developing after the annual maximum is updated. But now the price has come to a fairly strong support area, formed around the level of 1325.00, from which we can expect a resumption of upward movement. The main target is the level of 1340.00.
Resistance Levels: 1340.00, 1343.00, 1350.00;
Support levels: 1325.00, 1318.00, 1310.00.
The main scenario - growth in the direction of 1340.00.
An alternative scenario - consolidation below 1325.00 and a decline to 1318.00.
Locally, the market is dominated by a moderately negative news background, which contributes to the development of the corrective movement. But, on the chart, the price went up to a very strong support area (level 1325.00), from which you can consider short-term longs.