#Middle East Situation# #Gold Technical Analysis# 24K99 News On Thursday (June 6th), spot gold surged by more than $20, and once approached the $2,380/ounce mark during the intraday trading. Analysts pointed out that the weakness of the US dollar and the geopolitical tensions are the main drivers of the rise in gold prices. The Israeli military announced on Thursday that it had completed the deployment of large-scale military operations to Hezbollah in Lebanon. On this trading day, investors are focused on the US non-farm payroll data for May, which is expected to trigger new trends in the gold market.
FXStreet analyst Christian Borjon Valencia pointed out that the price of gold reached a two-week high of $2,378/ounce on Thursday. The initial jobless claims in the United States were higher than expected, weakening the dollar and stabilizing US Treasury yields, which is a good news for gold.
Spot gold closed up $20.72 on Thursday, up 0.88%, at $2,375.83/ounce, with a highest touch of $2,378.55/ounce during intraday trading.
The yield on the benchmark 10-year US Treasury bond fell back from the daily high of 4.32% to 4.285%. At the same time, the US Dollar Index, which measures the performance of the US dollar against a basket of six currencies, fell 0.19% to 104.12 on Thursday.
Data released by the US Department of Labor on Thursday showed that the number of initial jobless claims in the United States, adjusted for seasonal variations, rose to 229,000 in the week ending June 1, higher than the market expectation of 220,000 and a 4-week high.
(Screenshot source: ZeroHedge)
The job market has cooled further, and it is expected to boost the confidence of the Federal Reserve in cutting interest rates. Some analysts believe that if the employment report continues to be unexpectedly weak, a rate cut in September or even July may become possible.
The ADP employment data released on Wednesday also fell short of expectations. The data showed that the private sector in the United States added 152,000 jobs in May, lower than the expected 175,000 and the 188,000 in April.
Jim Wyckoff, senior analyst at Kitco Metals, said: "The weak ADP employment data on Wednesday added bullish confidence, and more believed that Friday's employment report might not be stronger than expected, which would be beneficial to the gold and silver markets."
Valencia wrote that after the latest US employment data, traders are shifting their focus to the May non-farm payroll report on Friday. It is estimated that the US economy will add 185,000 jobs, higher than 175,000 in April. The unemployment rate is expected to be 3.9%, and the average hourly wage is expected to remain unchanged at 3.9%. Weak non-farm payroll data may increase the possibility of a rate cut by the Federal Reserve.
According to CME's "FedWatch" tool, traders currently expect a 57% chance for a Fed rate cut in September.
As gold does not bear interest, a cut in interest rates can reduce the opportunity cost of holding gold and increase its attractiveness to investors.
David Meger, director of alternative investments and trading at High Ridge Futures, said that if Friday's non-farm employment report is stronger than expected, the Federal Reserve may find it difficult to cut interest rates as soon as possible, which will put pressure on the gold market.
The situation in the Middle East continues to be tense, and the Israeli military is ready to launch a large-scale attack against Hezbollah.
FXStreet analyst Haresh Menghani pointed out that the continuing geopolitical tensions caused by the ongoing conflict in the Middle East continue to be the driving force behind the hedging of gold prices.
Sources in the Gaza Strip said on June 5 that Israeli forces bombed many areas in the central part of the Gaza Strip from the evening of the 4th to the early morning of the 5th, causing at least 75 deaths, including women and children. The sources said that the Israeli army bombed and shelled the Breij refugee camp, the Meghazi refugee camp, and the eastern part of Deir al-Balah. The attack caused 75 deaths and dozens of injuries.
In addition, the Israeli Defense Forces announced on Thursday that it had completed the deployment of large-scale attacks against Hezbollah in Lebanon.
According to a statement issued by the Israeli Defense Forces on Thursday, the mission of the IDF is to restore security to northern Israel, and the preparations have been completed in the past week.
Israeli Prime Minister Netanyahu said during a visit to the military base in the northern town of Shimonah on Wednesday that Israel is ready to take "very violent action" against Hezbollah in the north.
According to Al Jazeera, the Israeli army is waiting for a government decision to turn the front line against Hezbollah in Lebanon into the "main battlefield" and turn the war in the Gaza Strip into a "secondary battlefield".
Israel Broadcasting Corporation reported that the Israeli government allows the recruitment of an additional 50,000 reserve soldiers to prepare for the escalation of the war on the Lebanese front.
The Israeli Defense Forces confirmed on Wednesday afternoon that the town of Hurfeish in northern Israel was hit by a missile attack from Lebanon, causing 11 injuries.
The Chief of Staff of the IDF, Aviv Kochavi, said on Tuesday that the IDF has been fighting against Hezbollah in the north for about eight months. Hezbollah has recently increased the frequency of its attacks against Israel, and the IDF is ready to launch an offensive against Hezbollah in the north.
Since the conflict between Israel and Hezbollah erupted on October 7 last year, the two sides have been fighting along the Israel-Lebanon border, occasionally causing casualties on both sides. Many residents in the southern part of Lebanon and the northern part of Israel have already evacuated.
Gold Technical Analysis
FXStreet analyst Christian Borjon Valencia pointed out that after a consolidation in the range of $2320-$2360 per ounce, gold price continued to rise, but buyers breaking through the top of the range opened the door for further price increase. As the relative strength index (RSI) is still bullish, momentum is still on the buy side.
Valencia said that if gold prices continue to rise, the next resistance level would be $2400 per ounce, followed by this year's high of $2450 per ounce.
(Spot gold daily chart source: FXStreet)
Valencia added that on the other hand, if gold prices fall below $2350 per ounce, the next support level will be the 50-day simple moving average of $2337 per ounce. The next bearish target will be the low of May 8 at $2303 per ounce, followed by the cycle low of $2277 per ounce on May 3.
FXStreet analyst Joaquin Monfort pointed out that gold has broken through the range of $2315-$2358 per ounce. The upward breakout casts doubt on the short-term downtrend and may signal a reversal.
Monfort said that after breaking through the range, the current target for gold is $2385 per ounce. The medium- to long-term trend of gold is still bullish, and the recovery risk is still high.
(Spot gold 4-hour chart source: FXStreet)