Chapter 11  XAUUSD: Nonfarm Payrolls Approaching, How Will Gold Move?(7.06)


During the Asian session on Thursday (July 6th), spot gold oscillated narrowly, and it is currently trading around 1920. According to the latest Fed minutes released on Wednesday, almost all officials agreed to "stay still" last month, and all believe that there may be further tightening of policy. The hawkish tone pushed up U.S. bond yields and further strengthened the USD. Comparingly, gold prices were under pressure and depreciating, with the highest daily level reaching the 20-day SMA (1935), and the lowest falling to 1915. Tonight, the U.S. JOLTS, ADP private employment data, and weekly initial jobless claims report will be released, and the focus of the market will be shifted to the data, which may guide the trading for a period later. In general, the gold price falls from highs and shows a weak trend in the short term, but this trend will not last, because although the current U.S. economy is maintaining well, it is difficult to keep interest rates above 5% for a long time. Moreover, under the current business cycle, the economy's tough times are coming.

Key data: the U.S. June ADP employment data, the U.S. initial jobless claims, the U.S. May JOLTS, and the U.S. June ISM Non-Manufacturing PMI data.

Technical Analysis

Daily chart: a large bear candle covers the 4-day ascending pattern, dragging gold backward when it just turned strong. In addition, the MACD indicator is still in the oversold zone, forming a golden cross but sticky. Now, gold is hovering near the 5-day SMA and failing to run smoothly, and the oscillation pattern is difficult to change, keeping gold away from an effective range. Furthermore, gold is under a weak oscillation trend below the 20-day SMA, and it may oscillate in the range of 1912-1930 during the daytime. However, there will be significant data released tonight in the U.S. session, including ADP employment data, unemployment data, and PMI data. These data may force gold to rise or decline and hits the boundary of the current range. If gold surges up and breaks 1930, the further focus should be on 1940-1950. Instead, if gold plunges and breaks 1914, then try to consider the support near 1902.

Today's trading recommendations: There will be essential data out tonight. Although the oscillations were small during the daytime, the market may trade the expectations in advance. About yesterday's pattern, it was as expected and gold rebounded to 1933, which also took profits. About today, it is better to buy lows and sell highs, and wait patiently for the release of data. Additionally, it is recommended to wait for the 20-day SMA climbing up to 1931 and go short with small positions. Meanwhile, try to set the stop loss at 1936, and take profit according to the support at 1910. However, if gold falls quickly to 1914, traders can go long shortly after gold stabilized, and set the stop-loss at 1908. About taking profits, try to fix it at 1930.

XAUUSD: Nonfarm Payrolls Approaching, How Will Gold Move?(7.06)-Pic no.1

Trading Recommendations

Trading direction: Long

Entry price: 1910

Target price: 1930

Stop loss: 1902

Support: 1910.000/1900.000

Resistance: 1931.000/1940.000

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