Selling Gold Again After Lower Jobless Claims in the US
Starting in May, the price of Gold had been steadily decreasing, and this decline gained momentum in August, primarily because the economic data coming from the United States indicated resilience in the US economy. This downward trend persisted until the middle of August, marked by a pattern of achieving progressively lower highs in Gold prices.
However, there was a notable change in the last two weeks. During this period, there was a reversal in the trend, causing the price of Gold to rise above $1,950. This shift in Gold’s price direction can be attributed to the fact that the economic data coming from the United States had softened during these last two weeks. This softening of economic data had a negative impact on the U.S. dollar (USD), leading to a decrease in its value.
When the value of the U.S. dollar weakens, it tends to increase the demand for gold as a safe-haven asset, which in turn, pushes up the price of GOLD . But the retrace seems to be over as we are seeing the bearish momentum resume again this week and the latest high was lower than the previous one, confirming the larger bearish trend.
Today the initial unemployment claims which were released a while ago came in weaker than expectations, also confirming the declining trend, suggesting that the labour market is in good shape. This has given further support to the USD, which is pushing Gold lower. We decided to open a sell Gold signal at the 50 SMA (yellow) on the H1 chart, which was acting as resistance, rejecting the price.
US Initial Jobless and Continuing Claims
- Weekly initial unemployment claims 216K vs 234K expected
- Prior week unemployment claims were 228K
- four-week moving average vs 237.5K prior
- Continuing claims 1.679m vs 1.715m expected
- Prior week continuing claims were 1.725m
In other words, the data of the last two days, including the jump in ISM services we saw yesterday, seems to contradict the belief that the US economy is in a state of slowing down fast. This could be seen as a positive sign or a counterargument to those who have concerns about the economic outlook.
Gold XAU Live Chart
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