Gold futures are trading flat on Friday after recovering from early session selling that drove the market into its lowest level since May 19. Firm Treasury yields and a stronger U.S. Dollar are weighing on the dollar-denominated asset, while investors await U.S. Non-Farm Payrolls data for May, due to be released at 12:30 GMT.
At 08:45 GMT, August Comex gold futures are trading $1872.70, down $0.60 or -0.03%.
Stronger-than-expected U.S. jobs data on Thursday was the catalyst fueling the sell-off on fear over possible tapering of stimulus measures by the Federal Reserve.
All eyes will be on today’s NFP report as gold investors look for more cues on the labor market recovery in the world’s biggest economy and near-term policy action from the Fed. Traders expect the report to show the economy may have added 650,000 new jobs in May with the Unemployment Rate falling from 6.1% to 5.9%.
A stronger-than-expected headline number could trigger another steep break on Friday.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The trend turned down on Thursday when sellers took out the last swing bottom at $1884.30. A trade through $1919.20 will change the main trend to up.
The minor trend is also down. Taking out the minor bottom at $1854.40 will indicate the selling pressure is getting stronger.
The market is currently trading on the weak side of a major 50% to 61.8% retracement zone at $1899.20 to $1951.30. This zone stopped the rally at $1919.20 on June 1. It is controlling the near-term direction of the market.
Additional resistance is the minor 50% level at $1886.80.
The market is currently straddling another 50% level at $1865.00 that could determine the direction of the gold market on Friday.
Potential support levels come in at $1838.00, $1822.40 and $1799.30.
The range of the entire March 8 to June 1 rally is $1678.40 to $1919.20. Its 50% level is $1798.80. This is our primary downside target.
Daily Swing Chart Technical Forecast
The direction of the August Comex gold market on Friday is likely to be determined by trader reaction to the 50% level at $1865.00.
A sustained move under $1865.00 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the minor bottom at $1854.40, followed by another minor bottom at $1838.00.
The selling could start accelerating to the downside under $1838.00 with potential targets the 50% level at $1822.40, and the support cluster at $1799.30 to $1798.80.
A sustained move under $1865.00 will signal the presence of buyers. This could trigger a labored rally with upside targets coming in at $1886.80, $1899.20 and $1919.20. Since the main trend is down, sellers could come in on a test of any of these levels.