After almost honouring the Fibonacci Retracement’s Golden Ratio and reversing from the level to resume a selloff that began in the previous week, the Gold Spot Price (XAUUSD) started the week off on the back foot. The spot price is down seven basis points for the week, despite finding favour with bulls that swiftly bought into the safe haven in Monday’s trading session, following weak PMI data from Dallas and Chicago.
This week, the spot price will navigate through a busy economic calendar with the release of PMIs in the Euro Area and, more importantly, the U.S. In addition, traders will be at tenterhooks this week as they await crucial U.S. labour market data, with the JOLTs Job Openings, ADP Employment Change and Nonfarm Payrolls (NFP) looming. What lies ahead for the yellow metal?
Technical
The Gold Spot price has experienced two weeks of choppy price movement with sharp swings resulting in both upward and downward price action. The sharp selloff from Thursday last week was met with bullish opposition, which formed support at the 1942.53 per ounce level. The selloff formed a resistance at the 1982.12 level, which could not be met by equally matched upside momentum. The rejection of the support level only took the spot price as far as the 61.80% Fibonacci Golden Ratio at 1967.00, where downside momentum was looming.
Given that downside momentum is currently at play, the spot price will likely approach the support level of 1942.53 if selling pressure persists. In contrast, if downside volumes begin to dissipate, it could indicate weakening downside momentum, with a reversal potentially imminent. Traders optimistic about the spot price outlook will likely earmark the 1982.12 resistance level as a point of interest to the upside.
Summary
Given that the economic calendar is crowded with key events looming, the Gold Spot price will likely pick up momentum in a specific direction based on the outcomes. The key to the market’s sentiment towards the spot price will probably be the Nonfarm Payrolls. The NFP is expected to taper off from 209K to 200K. If realised, the Gold Spot Price could find favour in the market as further rate hikes by the Federal Reserve, which is opposed to a strong labour market, become less likely, leaving the 1982.12 level probable.
Sources: U.S. Bureau of Labor Statistics, Reuters, TradingView
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