Gold continues to sit lower on the day but buyers cling on to the overnight low for support during the session
In terms of fundamentals, the near-term risks will be defined by the US jobs report and Fed chair Powell’s speech later today. But technically, there are a few key spots to watch out for as well before we get to the weekend.
As it stands, the overnight low @ $1,506.36 is keeping the decline today at bay as price bounces off that level in the past hour but the $1,500 will be the key psychological level to keep an eye out for today.
A break below that and specifically lows around $1,480-87 will give sellers more conviction to retrace price further after a solid run to the upside since June trading.
Price could potentially be eyeing towards the $1,450 region again if we do observe such a move in the coming sessions.
Meanwhile, for buyers there is plenty of work to be done now. A move back above $1,520 is the first key step to establish some momentum but ultimately, price needs to climb back above the key hourly moving averages – which are sitting closer to $1,533 – to test new highs.
I still view the retracement in gold here as a good thing as it allows for better opportunities to pick at in the bigger picture. With the global easing cycle set to continue over the next 12 months as the global economy weakens further, it will continue to push bond yields lower and in turn keep gold among the more attractive assets for investors.
Sure, there may be a few hiccups along the way from trade optimism but ultimately, gold will continue to benefit in the long-term so long as major central banks are set to ease policy further – especially the Fed.