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Fundamentals

During the Asian session on Friday (June 2nd), spot gold oscillated narrowly and is currently trading around $1978. Overnight, the released U.S. data was weaker than market expectations, fed officials continued to make dovish speeches, and the market bets further on June rate cuts, all weakened the USD sharply and provide support for gold prices. Moreover, technical bullish signals have been enhanced, suggesting further rebound opportunities for short-term gold. Respectively, it is recommended to consider the resistance near $1988 and $2000. Now, the market has basically reached a consensus that the debt ceiling bill will finally be passed, and thus few investors would trade it as the main logic. Also, gold's safe-haven role will also be out of the trading logic, while the fading short-term safe-haven demand may slightly limit the rise. Therefore, a wave of stimulus is needed for gold to surge over the key resistance.

Investors can focus on tonight's Nonfarm Payrolls data. The market expectation for nonfarm jobs is adding 190,000 while the unemployment rate is expected to climb from 3.4% in April to 3.5%.

In general, there are enormous data out yesterday, the U.S. manufacturing sector contracted for the seventh consecutive month in May, ADP data was negative for the USD, and the number of weekly initial jobless claims increased slightly, all data dragged down the USD. Besides, the 10-year U.S. bond yields hit a two-week low, the USD weakened sharply, and gold prices extended the rebound trend, recording positive for 5-consecutive days. The bullish sentiment is getting stronger, pushing up gold prices from $1932 to $1983, which is the first wave of rebound after the decline in May, while this wave has also come out of the rebound of $50, which reached the initial target and boosted the oscillation pivot. However, the next direction and extent will be determined by the next Nonfarm Payrolls data, the market will not move a lot but become more conservative. Furthermore, check the resistance near $1988 above and the support of $1962 below, and consider the specific impact of tonight's Nonfarm Payrolls data. If the data is positive, $1988 will be broken, and the further target should be $2000. Instead, if the data is negative, $1962 will be broken, and $1952 should be the next target.

The trading range today will be $1962-$1988.

Technical Analysis

Daily chart: the current KDJ golden cross continues, the MACD bear candle shrinks and has a golden cross trend, and the 5-day SMA crosses above the 10-day SMA initially. Before losing the 10-day SMA ($1962), gold prices have further rebound opportunities. The initial resistance will be near the 20-day SMA ($1981), or refer to yesterday's high near $1983, further resistance will be in the 38.2% Fibonacci retracement ($1988) of the depreciation from $2080-$1932. A break above this resistance would be expected to further test the resistance at $2000 and add to the bullish signal. Regarding the situation below, the initial support would be at $1962, with the next one staying in the range between $1950-$1952. If gold successfully breaks through it, it may test the support at $1932 below, where the starting point of the current round of rally.

Trading recommendations for today: buy low and sell high without trading too early. Investors should pay more attention, go long with small positions when gold retraces to near $1962 and stop loss if gold plunges below $1952, taking profits near $1988. If gold tests again near $1982, aggressive traders could go short again with small positions in the near term, stop loss manually if gold surge over $1988, and take profits when gold reaches $1962.

Trading Recommendations

Trading direction: long

Entry price: 1962

Target price: 1988

Stop loss: 1942

Support: 1952.000/1932.000

Resistance: 1962.000/1988.000