{x} | Trading.live

Fundamentals

Spot gold oscillated narrowly during the Asian session on Monday (July 10th) and is currently trading around 1920. Besides, the latest Nonfarm Payrolls released on Friday did not grow as much as the "ADP Nonfarm Small Payrolls" released last Thursday. The number of new Nonfarm Payrolls in June fell beyond expectations to 209,000, a new low in two years. After the data was released, the market doubts whether the Fed will raise interest rates after July, the U.S. bond yields fell and then rose, and the USDX plunged. In addition, the U.S. announced an $800-million new aid plan for Ukraine, which also supports gold prices to rebound and once touch a daily high near 1935. Considering the nonfarm payrolls growth slowed but is still strong, and upward pressure is huge, there is no reason for the Fed to suspend interest rate hikes in July. Thus, gold is difficult to come out of the unilateral market, and it will maintain the oscillation until the July rate hike is determined.

Data: Nonfarm Payrolls increased by 209,000 in June, the smallest increase since December 2020. Economists had previously forecast an increase of 225,000. Moreover, it was also the first time in 15 months that job gains fell short of expectations. In addition, the U.S. unemployment rate slipped to 3.6% in June from a seven-month high of 3.7% in May. The unemployment rate has remained between 3.4% and 3.7% since March 2022.

For investors, it is important to focus on U.S. June CPI and PPI data, as well as the Beige Book to be announced this week, and the Fed officials' speeches. After the Nonfarm Payrolls data released on Friday hit Fed rate hike bets, investors need to keep attention to officials' related speeches this week.

Technical Analysis

Daily chart: Although gold moved upward after descending for several days last week, it closed under the Bollinger middle band and formed a short-term double-tops pattern at 1935. Therefore, gold is hard to appreciate until it crosses above 1935. Instead, gold has gained support near 1902 many times, limiting it from descending significantly below. Thus, gold will oscillate between the double-top pattern near 1935 and the multiple-bottom pattern near 1902. For investors, try to buy lows and sell highs when gold moves inside this range. At the same time, investors expect a bullish market after the positive Nonfarm Payrolls released on Friday and ease the expectation of an interest rate hike in July, which may result in a strong short-term pattern, and gold may even surge above 1940-1950 to test 1960, where massive resistance is located. Nonetheless, the upward space will be insufficient unless supportive data from fundamentals are out.

Today's trading recommendations: As it is mentioned last Friday, if the Nonfarm Payrolls are positive during the evening session, gold will test and try to cross above 1933. Currently, gold will maintain oscillating at the beginning of this week with the pattern center lifted. Looking below, the initial support will be near the 5-day SMA (1919). If gold stays above the 5-day SMA, the ascending momentum will be boosted tremendously, while the appreciation of gold needs support from fundamentals. Furthermore, there are speculations of interest rate hikes in July, and these speculations will be the biggest support for recent gold prices. For aggressive traders, it is recommended to go long with small positions when gold returns below 1919 during the daily session. Also, try to set the stop-loss at 1914, take profits at the 20-day SMA (1928) and keep breakeven positions. However, if gold ascends to 1935 again, aggressive traders can go short with small positions shortly and set the stop-loss at 1940. To take profits, try to refer to 1920 and reduce the positions step by step.  

Trading Recommendations

Trading direction: Long

Entry price: 1918

Target price: 1935

Stop loss: 1914

Support: 1903.000/1892.000

Resistance: 1928.000/1935.000