Trading the Volatility in Gold Today
From October to the end of December, Gold buyers fought hard, pushing the price above all-time highs and setting new records. However, the bullish movement was halted when it reached the $2,100 level. The recovery stalled due to any uncertainties surrounding the global economy and central bank policy trajectory, which has been helping the USD during the start of the new year.
Today the decline in Gold continued and it lost more than $25 as the price slipped below $2,020 during the Asian and European sessions. However, we saw a swift rebound in the US session for no particular reason, as the US dollar fell to the lowest levels of the day, driven by a 90-pip drop in USD/JPY .
The move lower was triggered by a $4 decline in crude Oil, with US WTI heading toward $70 again. That is weighing on US bond yields while boosting stock markets on the other hand. so, all of a sudden we are seeing a reversal from risk-off to a risk-on atmosphere characterized by USD weakness which is shown in the charts. Gold has been a roller coaster to start the year, and it is currently trying to get to $2,040, where the 50 SMA awaits on the H1 chart.
Last week’s US jobs and services reports were mixed, adding further to the uncertainty and causing a wave of volatility. The Services PMI fell from 52.7 points to 50.6 points which is close to stagnation, while the Employment reading in the report plummeted to 43.3 points, putting it in the contraction zone. However, the US Non-Farm Payrolls figures came in stronger than expected, pushing the US dollar higher as interest rate cut expectations were reduced.
We already had a sell GOLD signal earlier today which hit the take profit target during the decline. However, after such a strong surge, we decided to reverse trade and open a short-term buy Gold signal above $2,030. If this trade closes in profit, then we will try to open a long-term sell Gold signal closer to $2,040 where the 50 SMA awaits on the H1 chart.
Gold Live Chart
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