Daily Brief, July 03 – Everything You Need to Know About Gold on Friday!
Arslan Butt • 3 min read
Happy Friday, fellas,
The yellow metal gold prices closed at $1,775.64 after placing a high of $1,779.52 and a low of $1,757.47. Overall, the movement of gold remained bullish throughout the day. Gold reversed its course in the late session on Thursday, edging higher on the back of the weak US dollar. However, the yellow metal remained below the previous day’s high level, due to increased hopes for economic recovery after data revealed that the US economy had achieved a record high in jobs in June.
At 17:30 GMT, the Average Hourly Earnings for June showed a decline of 1.2% against the expected decline of 0.8%, weighing on the US dollar. The Non-Farm Employment Change for June showed an increase of 4.8M jobs, compared to an expected 3.037M jobs, lending support to the US dollar.
In June, the unemployment rate decreased to 11.1% from the expected 12.4%, supporting the US dollar. However, last week’s unemployment claims came in at 1.427M against the previous 1.350M, weighing on the US dollar. The Trade Balance from the United States showed a deficit of 54.6B against the expected deficit of 53.0B in May, which weighed on the US dollar and added strength to the rising gold prices.
At 19:00 GMT, the Factory Orders from the United States in May rose by 8.0% against the expected rise of 8.6%, also weighing on the US dollar and supporting gold prices on Thursday. Another factor behind the increased gold prices was the news about the delay in US pharmaceutical firm Moderna’s next coronavirus vaccine trial. The phase-3 study of Moderna’s vaccine, which included 30,000 patient trials, was expected to start next week, but reports have indicated that trials have been delayed.
On the other hand, this week, the Chinese biotech firm CanSino Biologics received approval from its government for clinical trials of its COVID-19 vaccine on Chinese troops, after having seen positive results in Phase 1 and Phase 2. The relations between the US & China could worsen further, as both countries have signaled that they are prepared to fight each other in many more ways, besides just on the technology and trade fronts. In the past few years, these two countries have been fighting over matters such as trade imbalance and technology competition, which has triggered the tariff war. In recent months, the origin of the coronavirus and the autonomy of Hong Kong have also had an adverse effect on the relations between the US & China.
Gold prices rose too, because the US-China relations were headed for their darkest chapter, due to the increased range of issues between them, and this, in turn, triggered the safe-haven demand. On the negative side, the gold prices remained under pressure, due to the optimism on the market, relating to the development of a COVID-19 vaccine by the joint efforts of German biotech firm BioNTech and US pharmaceutical giant Pfizer. On Wednesday, the two firms announced that the human trials for their potential coronavirus vaccine had yielded positive preliminary results, which raised optimism.
This news weighed on the increasing trend of gold prices and limited the additional gains in the yellow metal on Thursday. On the coronavirus front, the World Health Organization warned on Wednesday that some countries might need to reinstate lockdown measures, in order to control the second wave of the spread of the virus. California heeded the call for the reimplementation of lockdown measures, closing bars and banning indoor restaurant dining on the same day. This also helped gold to gain traction in the market, due to its safe-haven nature.
Daily Technical Levels
Pivot point: 1785.17
GOLD is trading in a wide trading range, on the 1,773 to 1,766 level. The upward trendline on the hourly timeframe is supporting the bullish bias in gold. On the lower side, support for gold prevails at around the 1,759 and 1,749 levels. On the flip side, a bullish breakout on the 1,773 level could extend the buying trend to the 1,789 level. Good luck!