Gold Price at Risk vs Dollar Ahead of US NFP Report
Aayush Jindal
Key Highlights
Gold price slowly moved higher and traded above the $1270 resistance against the US Dollar before starting a correction.
There is a nice ascending channel with support at $1260 formed on the 4-hours chart of XAU/USD.
Recently, the US ADP Employment Change for May 2017 released by the Automatic Data Processing, Inc. posted a solid increase of 253K.
Gold Price Technical Analysis
Gold price recently moved above $1270 against the US Dollar, but struggled near $1275. It is currently testing an important support at $1262, and remains at a risk of a breakdown.Looking at the 4-hours chart, there is a nice ascending channel with support at $1260, which is holding the current trend.However, the price is currently struggling to hold the channel support area at $1262-60. If sellers manage to break it, there can be more declines towards $1255.On the downside, the next important support is at $1250, which is near the 100 simple moving average (H4). If somehow the price manages to hold the channel support at $1260, it may retest $1270.
US ADP Employment Change
Recently, the US ADP Employment Change for May 2017 was released by the Automatic Data Processing, Inc. The market was aligned for a rise from 177K to 185K.However, the actual result was better, as there was a change of 253K from April to May 2017. Additionally, the last reading was revised to 174K. Commenting on the report, the vice president and co-head of the ADP Research Institute, Ahu Yildirmaz, stated:
Professional and business services had the strongest monthly increase since 2014. This may be an indicator of broader strength in the workforce since these services are relied on by many industries.
There was a decline in Gold price towards $1260, but the channel support area held losses.
US Nonfarm Payrolls and Unemployment
Today, the US will witness May’s 2017 release of the nonfarm payroll by the US Department of Labor. It is forecasted to increase by 183K in May 2017, less than the last 211K.The US Unemployment Rate in May 2017 is forecasted to remain stable at 4.4%, and the Average Hourly Earnings may increase by 0.2%, 0.1% less than 0.3%. The Average Weekly Hours for May 2017 likely to remain at 34.4.Overall, the market is aligned for a stable improvement in May 2017, which might weigh on gold prices in the near term.
Looking at the 4-hours chart, there is a nice ascending channel with support at $1260, which is holding the current trend.However, the price is currently struggling to hold the channel support area at $1262-60. If sellers manage to break it, there can be more declines towards $1255.On the downside, the next important support is at $1250, which is near the 100 simple moving average (H4). If somehow the price manages to hold the channel support at $1260, it may retest $1270.
However, the actual result was better, as there was a change of 253K from April to May 2017. Additionally, the last reading was revised to 174K. Commenting on the report, the vice president and co-head of the ADP Research Institute, Ahu Yildirmaz, stated: