Gold prices rose on Friday as weak economic data from the US increased safe-haven demand among investors. Prices were also set for a weekly increase.
Investors are also waiting for the release of the US nonfarm payrolls (NFP) data later in the day.
At the time of writing, the most-active gold contract on COMEX was at $3,393.35 an ounce, up 0.6% from the previous close.
Among other precious metals, silver prices continued to rise on Friday after hitting an over 13-year high in the previous session.
The most-active silver contract on COMEX was up 1.2% at $36.230 an ounce.
Brief slip up
Disappointing US economic data, which raised expectations for a Federal Reserve rate cut, was overshadowed by the announcement that US and Chinese teams would meet at an unspecified location. This news boosted risk appetite and subsequently drove bullion prices lower.
Gold prices had briefly pared some gains in the overnight session after the US President Donald Trump and his Chinese counterpart, Xi Jinping, was positive, with the two primarily discussing trade, according to Trump.
According to a social media post, Trump indicated that a recent call was successful and clarified any previous uncertainties regarding the complexities of Rare Earth products.
However, the initial optimism did not last long as risk appetite among investors waned after jobless claims in the US rose, according to data on Thursday.
New applications for US unemployment benefits surged to their highest level in seven months last week.
NFP report in focus
Expectations point to a 130,000 increase in US jobs for May. In April, job growth surpassed projections with 177,000 new jobs reported.
“A reading below 100K level could cast doubts on the health of the US labor market, which will likely bring forward bets for a July Fed rate cut, boosting the non-yielding Gold price at the expense of the US Dollar,” Dhwani Mehta, analyst at FXStreet, said in a note.
If the data surprises with a reading above 200K, Gold price could come under strong bearish pressures. Strong US employment data would justify the Fed’s prudence on interest rates, lending support to the Greenback.
Current projections from the CME Group’s FedWatch Tool indicate a 54% likelihood of the Federal Reserve reducing interest rates by 25 basis points in September.
Bullish outlook remains in gold
From a technical perspective, the bullish trend for gold prices remains unchanged, preserving the current positive outlook.
Currently, buyers are maintaining positions above the convergence of the 21-day simple moving average (SMA) and the 38.2% Fibonacci Retracement level, which stands at $3,297 and marks a portion of the April record rally, according to FXStreet.
For gold prices to climb back towards their record peak of $3,500, buyers need to ensure daily or weekly closes surpass the $3,377 resistance, which aligns with the 23.6% Fibonacci level, Mehta said.
Alternatively, sellers could attempt control on a break below the falling trendline resistance-turned-support, now at $3,318.
Strong support is located at the confluence level of $3,297, as noted earlier.
If the decline continues, the 50-day SMA at $3,262 will be tested.
A break below this point would leave the 50% Fibonacci retracement level at $3,232 as the final support for buyers during this current uptrend, according to Mehta.
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