Gold price (XAU/USD) fell heavily on Thursday by more than 1.8% after the number of Americans filing first-time claims for unemployment benefits dropped below 400,000 for the first time since the pandemic began in March 2020. Private sector employment also got a huge boost, with nearly a million jobs added in May. The two data sets point to a much improved U.S. labor market, which brings the economy a step closer to possible Fed considerations for tapering/rate hikes.
Initial jobless claims for the week ended May 29 came in at 385K, which was lower than the previous number of 405K and also less than the market consensus of 400K. ADP Employment Change came in at 978K, which beat the last figure of 654K and the market consensus of 645K handsomely to set up a massive selloff on gold prices.
Attention now turns to tomorrow’s NFP numbers as gold prices dip below $1870.
Technical Outlook for Gold Price
The gold price candle on the XAU/USD daily chart has violated the 1881.68 support level and appears set to form a bearish engulfing pattern with Wednesday’s candle. If the candle achieves a 3% penetration close below the 1881.68 support, the breakdown of that price support is confirmed, clearing the pathway towards 1860.77. Below 1860.77, the price wall formed between 1828-1840 becomes new support, followed by the 1815.20 and 1800.00 psychological price area.
On the flip side, gold price remains in a short-term uptrend. Any of the price levels mentioned above could serve as dip-buying points, allowing for an ultimate retest of 1900.95 and 1917.00, in that order. Only a break of the latter re-establishes the uptrend.