Daily Brief, May 11: Everything You Need to Know About Gold
Arslan Butt • 2 min read
Welcome back to another exciting week. I hope you had a great weekend. Things seem to improve on the coronavirus side, which is diminishing the demand for safe-haven assets such as gold. GOLD prices closed at $1701.37 after placing a high of $1723.39 and a low of $1700.73. Overall the movement of gold remained bearish throughout the day.
From its highest level of 2 weeks, gold dropped on Friday on the back of new hopes over the easing of lockdowns from all over the world. At the ending day of the week, the yellow metal dropped by almost 1.1% near $1700 level. Another reason behind the dropped demand on Friday was better than expected data from the United States.
The Average Hourly Earnings for the month of April increased to 4.7% from the expected 0.5% and supported the US dollar and weighed on gold prices. At 17:30 GMT, the Non-Farm Employment Change during April dropped by -20.5M against the expected drop by 22M and supported the US dollar. 20.5M job losses was not a good thing for the economy, but as it fell under the expected figure of 22 M, it helped the US dollar and weighed on gold prices.
The Unemployment Rate from the United States also fell short of expectations by coming at 14.7% against the forecast 16% and helped the US dollar to gain traction in the market against its rival currencies and as well as against gold.
However, the huge drop in monthly job counts made the US economy suffer a more severe crisis than it faced during the Great Depression. It was all because of the coronavirus pandemic, which affected not only the world’s biggest economy but also the global economy.
The worst job numbers ever faced by the United States in April 2020 lifted the US stock markets on Friday. Another factor including in the strength of the US dollar was optimism about the US-China relationship.
Gold – Daily Technical Levels
Pivot Point 1707.97
Gold prices have dropped from 1,722 level to 1,704 in the wake of less worse than expected NFP figures. For now, the precious metal is likely to face immediate resistance at 1,711 level and closing of candles below this level may lead prices towards 1,685. Gold’s selling bias remains dominant today.