Gold Analysis: XAU/USD - All eyes on Non-farm payrolls
London (May 8) Gold prices in terms of US dollar (XAU/USD) extended losses and closed in red at 1184.24 on Thursday, bouncing-off lows near trend line support located at 1179 levels. The pair failed to sustain above 50-DMA located at 1190 and slipped later in the US session after the greenback rebounded sharply higher following better than expected US unemployment claims data.
Currently, XAU/USD trades in a slim around 1185 levels, facing stiff resistance around 1189 levels where 50-DMA and 5-DMA coincide. At the moment, XAU/USD has formed a doji candle on the daily chart with the RSI at 45.80 turned flattish, indicating lack of clear direction ahead of the most influential US Non-farm payrolls data due later in the NA session. NFP is expected to post a 230,000 gain, along with the unemployment rate, which is predicted to soften to 5.4% from 5.5%. Soft data could prompt the Fed to delay a rate hike and boost non-interest-paying gold.
If the NFP figures come in above expectations, USD bulls would jump in strongly and drive the US dollar to 96-96.50 levels against its major counterpart. Hence, the pair may witness a sharp sell-off, breaking the trend line support at 1180 levels and fall further to test 1168 (May 1 Low) levels. Below the last floors would open for a test of 1160 levels. To the upside, the pair may break above the 5-DMA barrier in case of a miss on the data and could re-attempt 1200 mark, with 100-DMA located at 1210.20 levels posing as a strong resistance beyond a break of 1200 – psychological barrier. Overall, XAU/USD awaits the crucial US jobs data and a clear direction will shape up only post the data release. US NFP is due to be published at 12.30GMT.
Gold prices in terms of Euro (XAU/EUR) dipped to lows at 1038.27 levels before recovering and closing higher on Thursday at 1053.22 levels. The pair fell in to red earlier in the day as the shared currency resumed its previous uptrend and almost touched 1.14 handle versus the USD. However, later in the US session, USD bulls took over after upbeat US jobless claims data, lifting XAU/EUR higher on broad euro weakness.
Currently, the pair trades higher around 1057 levels and is on its way to retest 5-DMA resistance located at 1059. The pair edges higher amid persistent euro weakness as traders favour the reserve currency ahead of the key US NFP report. The daily RSI at 39 has inched slightly higher indicating further room for upside. However, the likely upside may confirmed only on the release of the US labour market report which may have major impact on the USD moves, eventually affecting gold in EUR terms.
To the upside, the pair may test 10-DMA located at 1070 levels in case the data is dollar supportive. However, the upside will remain restricted as a stronger US dollar along with higher treasury yields will dent gold prices across the board. In case the data surprises on the downside, the pair may retest previous lows at 1038.27 and below that a fresh sell-off may trigger dragging the pair to 200-DMA located at 1020.50 levels.