Gold prices are now struggling to clear the 21-day Simple Moving Average (SMA) at $3,350. Fleetingly, this struggle shines a light on the growing fatigue for buyers. Following a three-day rally, the price seems to be retreating from a weekly peak of $3,366. Traders are staring at the sudden onset of new selling pressure. This breather represents an excellent opportunity for gold traders to catch their breath while awaiting key economic data ahead.
Previously, gold was rejected at $3,365 causing pessimism around the asset’s short-term direction. Environmental investors and stakeholders are counting every single time Twitter has exploded with price fluctuation. They’re especially on high alert with the US Nonfarm Payrolls (NFP) data release coming up. The market is hungry to find out if this report will offer a clear directional impetus for gold prices to follow.
Current Market Dynamics
Indeed, gold’s recent performance has been influenced by a bearish tone amongst traders. The continuing buyer-seller battle is illustrated in the price action. Back in April, gold prices reached all-time highs in dramatic fashion. Now, they’re in the midst of a cyclical retracement period. The goal now appears to be focusing on the 23.6% Fibonacci Retracement (Fibo) level from that run-up, at $3,377.
The 14-day Relative Strength Index (RSI) is bullishly placed above the midline at around 52.30. That suggests that purchase demand still has a fair amount of momentum. The recent pullback gives us pause as to whether this trend is here to stay. A close above being watched would potentially trigger a major new bull leg. If this movement does, it can carry it all the way up to $3,400.
The situation remains delicate. If the next US jobs number is better than expected, gold could continue its retreat toward the 50-day SMA at $3,322. This possible change further drives home how crucial economic indicators can be in determining precious metal prices.
Impact of Economic Data
The market is now turning its attention towards the US Nonfarm Payrolls data, with the potential for this upcoming release to be a market-moving event. A terrible nonfarm payroll report would be music to gold bug ears. Perhaps it can get them back on track and keep them going in their recovery trend. On the opposite end, if the jobs report is stronger than expected that would likely provide additional support for the US dollar and weigh further on gold prices.
Market analysts have noted hardening resistance in the $3,440 region. Sellers are about to get a great opportunity. If they fail to hold important support levels repeatedly, analysts are cautioning we could be facing a massive collapse down to the $3,297 area, fate with the 38.2% Fibonacci level. Futures deeper declines may focus on monthly lows near $3,248 on further losses.
While traders are continuing to work through these dynamics, they are looking at the bigger picture in terms of the economy. This ongoing, persistent loss of global demand for the US dollar is what has fueled recent gold price rallies and gold price rebounds. Changing economic markers could rapidly change this picture.
Future Projections
Prospectively, players in the marketplace continue to be on high alert as they brace for the NFP data. The results will be a major driver of short-term gold price movements and can either help or hurt the new uptrend in place. Solid employment created greater expectations of a stronger dollar and therefore more foundational selling pressure on gold.