Gold price recouped some of its gains from the NFP report on Friday as it peaked at $1,723.07. As of this writing, the precious metal trades around $1,705.20. Could this mean that XAUUSD is headed lower or is this nothing more than just a pullback?
On Friday, gold price rallied after the NFP report for April showed that 20.5 million people lost jobs. While the actual figure was better than the expected reading of 22 million, it does not take away the fact that it’s a significant number. This translated to an uptick of 14.7% in the unemployment rate from its 4.4% reading in March. The only upside to Friday’s jobs report was the average hourly earnings which grew by 4.7% from 0.5%.
Now that the much-anticipated FOMC rate decision and NFP report are past us, market participants will likely take their cue from the US-China trade talks. Last week, we saw some volatility on the charts on news that tensions were rising between the two countries (later, on Friday, risk appetite was sparked by news that policymakers on both sides were committed to the trade deal). We could see this as a recurring theme for this week’s trading especially after US President Donald Trump began to ruffle some feathers, tweeting about “China and the horrible Virus pandemic that was inflicted upon America.”
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Gold Price Outlook
Remember the symmetrical triangle I pointed out on gold price last week? Well, XAUUSD broke resistance at the top of the triangle. However, the precious metal has recouped some of its gains. On the 4-hour time frame, it can be seen that gold price has retested its previous resistance for support. The price around $1,700.00 also coincides with the 100 SMA and the 50% Fib level when you draw the Fibonacci retracement tool from the low of May 7 to the high of May 8. Reversal candlesticks around the psychological handle could mean that the recent drop on gold price is nothing more than just a pullback.
However, be wary of a drop below today’s low at $1,699.61. This could suggest that the support at the top of the triangle did not hold. In turn, it could signal a potential drop to $1,680.90 where XAUUSD bottomed on May 7.
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