Gold Finds Support After Trading to $1,302

Today’s jobs report came in below expectations suggesting that the Federal Reserve will not raise interest rates aggressively while maintaining a tightening of its monetary policy. This, along with renewed concern about a looming trade dispute between the United States and China, was supportive of gold pricing.

According to Business Day, “Senior Chinese and American officials concluded two days of negotiations late Friday afternoon with no deal and no date set for further talks, as the United States stepped up its demands for Chinese concessions to avert a potential trade war.”

This week’s discussions did little to dampen fears of an imminent trade war between the two largest economies, with both the United States and China threatening to initiate deep tariffs on tens of billions of dollars of each other’s exports.

Although gold is trading lower on the week, its recovery on Wednesday and Thursday indicate that a potential bottom occurred ending the most recent correction.

There was a confluence of technical indicators supporting this assumption. The lows gold traded to this week occurred at the 200-day moving average, which intersected with a 50% Fibonacci retracement. A Three River Morning Star was identified consisting of daily candles on Tuesday, Wednesday, and Thursday. Today’s higher pricing creates a confirming candle to the Morning Star pattern.

Gold is trading modestly higher, up $2.20, with June futures currently at $1,314.90.

Dollar strength continued to provide headwinds limiting any substantial gains in the precious metals complex. Over the last 14 trading days, the dollar index has closed higher on 11 occasions. The U.S. dollar gained 2/10% today and is currently fixed at 92.44

Our technical studies indicate strong support at $1,300. However, should that price point be breached, gold could trade as low as $1,288. The first resistance level occurs at $1,330, with major resistance at $1,365, a price point which gold has not been able to break above even after multiple attempts.

Wishing you as always, good trading,