Gold was trading with a clear-cut bearish trend. Now it is consolidating in the area between $1,265 and the $1,280 support, from where it is expected to continue with the bearish momentum being subdued by the dynamic resistance level.
Gold prices rose recently as investors were flocking to safe haven assets selling tumbling equities. The reason is that US President Donald Trump threatened to raise tariffs on Chinese imports this week as he is disappointed by too slow progress in the trade talks. On Friday, the US non-farm payrolls surpassed expectations. An unemployment rate seemingly edged down in April as labor force participation shrank. Besides, average hourly eanrings eased growth undershooting the consensus.
However, Fed's Chair Jeromy Powell may confirm the central bank's dubious stance on easing which might be reinforced by the nearest CPI data though it is expected to be unchanged at 0.4%. As USD is gaining momentum, gold is losing ground in response. Worries about a downshift in the business cycle might revive risk aversion and USD will have relatively little to keep it from capitalizing on haven flows if the Fed is going to taper stimulus. Amid broad-based strength of USD, Gold is expected to extend weakness.
From the technical viewpoint, a daily close below $1,280-$1,265 support area will indicate further downward pressure which may push the price towards $1,250 and later towards $1,225 support area in the coming days.
SUPPORT: $1,250, $1,265, $1,280
RESISTANCE: $1,300, $1,325
BIAS: BEARISH
MOMENTUM: VOLATILE
