Last Friday (June 7th), gold prices plummeted violently, with spot gold falling about 3% all day, closing at 2292.70 US dollars/ounce, and the lowest intraday touching 2286.50 US dollars/ounce, with a staggering drop of $100. On Friday, gold suffered a sharp decline, due to the impact of strong US employment reports and China's suspension of bid. Data released last Friday showed that non-farm employment in the United States increased by 272,000 in May, higher than the 185,000 expected by economists surveyed by Reuters. After the average hourly wage increase slowed to 0.2% in April, it increased by 0.4% in May. In the 12 months ending in May, wages grew by 4.1%, up from the upwardly revised annual growth rate of 4.0% last month. However, the unemployment rate rose from 3.9% in April to 4%, previously dropping below this symbolic threshold for 27 consecutive months. Strong employment growth and wage data indicate that the Fed may not be eager to start a loose cycle this year. Unexpectedly, the non-farm exploded on Friday, causing a market reversal. The dollar surged and gold collapsed by $100. In addition, data showed that the People's Bank of China (PBOC) kept its gold holdings unchanged at the end of May after ending a consecutive 18-month increase in gold reserves, while spot gold prices hit a historic high in May. There are signs that as prices rise, China's gold demand is cooling, which further triggers the market's bearish sentiment. Next, the market's focus will turn to the US Consumer Price Index (CPI) report released this Wednesday, and the Fed will also announce its interest rate policy decision on the same day. The current market expects that the Fed will not make any changes to its policy interest rate this week, but the focus will be on the latest economic forecasts by decision-makers and what Fed Chairman Powell will say and state at the press conference after the two-day meeting. It is expected that gold investors will wait and see before the highly anticipated May inflation data and the Fed's monetary policy meeting, and gold is temporarily in a weak position.
On Friday, gold suffered a sharp decline due to the impact of strong US employment reports and China's suspension of bid. Data released last Friday showed that non-farm employment in the United States increased by 272,000 in May, higher than the 185,000 expected by economists surveyed by Reuters. After the average hourly wage increase slowed to 0.2% in April, it increased by 0.4% in May. In the 12 months ending in May, wages grew by 4.1%, up from the upwardly revised annual growth rate of 4.0% last month. However, the unemployment rate rose from 3.9% in April to 4%, previously dropping below this symbolic threshold for 27 consecutive months. Strong employment growth and wage data indicate that the Fed may not be eager to start a loose cycle this year. Unexpectedly, the non-farm exploded on Friday, causing a market reversal. The dollar surged and gold collapsed by $100. In addition, data showed that the People's Bank of China (PBOC) kept its gold holdings unchanged at the end of May after ending a consecutive 18-month increase in gold reserves, while spot gold prices hit a historic high in May. There are signs that as prices rise, China's gold demand is cooling, which further triggers the market's bearish sentiment. Next, the market's focus will turn to the US Consumer Price Index (CPI) report released this Wednesday, and the Fed will also announce its interest rate policy decision on the same day. The current market expects that the Fed will not make any changes to its policy interest rate this week, but the focus will be on the latest economic forecasts by decision-makers and what Fed Chairman Powell will say and state at the press conference after the two-day meeting. It is expected that gold investors will wait and see before the highly anticipated May inflation data and the Fed's monetary policy meeting, and gold is temporarily in a weak position.
Source: E-huitong
Technically speaking, from the daily gold chart, the relative strength index (RSI) has fallen below 50, reflecting an increase in bearish momentum. The gold price has fallen below the 23.6% Fibonacci retracement level of $2320/ounce since mid-February, as well as the psychological barrier of $2300/ounce. In the short term, the stronger support for gold is at $2260/ounce (38.2% Fibonacci retracement level). If the gold price continues to fall below this level, it may trigger a new round of selling and fall to the 100-day moving average of $2214/ounce. On the upside, any rebound in gold prices requires a breakthrough of the 50-day moving average of $2343/ounce. Looking further up, recapturing the 21-day moving average of $2357/ounce will be the key to eliminating recent bearishness.
Wang Gang, Bank of China Guangdong Branch
For personal views only, not representative of the views of the organization.