Gold prices are starting the week with a bid tone as price continues to recover off the 1668.91 level support tested last week. The man story for now is the dramatic rebound in the US jobs number seen on Friday. Following a record plunge of -20.5 million jobs in April, the market was expecting a -7.5 million reading for May, reflecting the tentative reopening underway across the month. Similarly, unemployment was forecast to rise further from April’s 14.7% level to 19.4%. These readings were in line with survey data across the month which reflected continued joblessness. However, the headline NFP was seen making an astonishing recovery to 2.509 million jobs in May while the unemployment rate fell back to 13.3%. There have been questions over how such a dramatically different set of data could be possible given that even just a day prior unemployment claims were still just shy of 2 million on the week.
Gold prices came off in response to the data, with the Dollar rallying, which suggests that US economic projections might need to be revised to prepare for a stronger than expected recovery. However, the initial response to the data seems to have paused for now and gold is trading in the green again as of writing as traders digest the moves and await the Fed on Wednesday.
Silver prices have been broadly in line with what we have seen in the gold market over the last few days with price correcting lower following the initial break higher. The rally in equities over recent weeks has been much more supportive of silver, however, seeing price rallying firmly from the base created over April. The pause in the USD sell off has stunted silver upside for now and traders will be closely monitoring the FOMC on Wednesday to see if there has been any shift in view following the record spike in US jobs data last month, which could prompt further USD buying if traders sense that Fed easing is likely to remain on hold for the time-being.
Gold (Bullish above 1668.91)
From a technical viewpoint. Price action in gold over April and May reflects the loss in upside momentum with price failing to make a closing breach of the 1747.15 level. However, with VWAP still positive, while the 1668.91 level continues to hold, the near-term bias remains bullish with 1790.76 the prime objective for bulls.
Silver (Bullish above 17.2226)
From a technical viewpoint. Silver prices continue to hold above the yearly pivot at 17.2226 following the breakout last month. While this level holds as support, and with VWAP positive, a further push higher into the completion of the symmetry swing objective at 18.7870 remains the key objective.
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