Gold prices extended their losses in yesterday’s trading as the market’s focus shifted away from the US-Iran conflict. XAUUSD dropped from its Asian session highs at $1,560.93 to its intraday low at $1,539.86. The precious metal was able to recoup some of its losses and finish the day at $1,552.07, 83 cents below where it opened for the day.
No More War Between the US and Iran?
Market participants seemed to be relieved with US President Trump’s announcement that the US will not retaliate against Iran after its military bases in Iraq were attacked. This consequently led to dampened demand for gold which is known for its reputation as a safe haven asset. While I am sure that geopolitics is still at the back of everyone’s mind, it will need to take the backseat to today’s roster of economic data.
US NFP Due Today
The much-anticipated US NFP report for December is scheduled for release at 1:30 pm GMT. It is eyed to print at 162,000. The unemployment rate is also scheduled and is expected to match November’s reading at 3.5%. Meanwhile, the average hourly earnings report is anticipated at 0.3%. Better-than-expected NFP data could be bearish for gold prices. This is because positive numbers would reflect the strength of the US economy and would strengthen the dollar. On the other hand, disappointing numbers could weigh down the currency as they would raise concerns about the state of the US economy. In turn, negative readings could be bullish for XAUUSD.
On the daily time frame, we can see that gold prices have retraced some of their gains back to the 38.2% Fib level (when you draw the Fibonacci retracement tool from the low of November 26, 2019 to the high of January 8, 2020). This price, around $1,545.60, also served as a previous resistance level on September 2019.
However, if there are enough sellers in the market in the next few trading days, XAUUSD could trade lower to $1,510.65. This price is the 61.8% Fib level. It also seems to coincide with the 100 SMA and the rising trend line (from connecting the lows of May 21, 2019, May 29, 2019, December 2, 2019, and December 13).
On the other hand, if there are enough buyers to turn today’s candle into a bullish candlestick (could be triggered by a disappointing NFP report) XAUUSD could rally back to its 9-year highs at $1,610.67.