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James Hyerczyk
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Gold

Gold futures reached their highest level since February 16 on Thursday as Treasury yields and the U.S. Dollar eased ahead of Friday’s U.S. Non-Farm Payrolls report. Despite growing economic optimism that has at times capped gains in the gold market, the buying remains strong, suggesting investors are going to continue to maintain their upside bias until the Federal Reserve begins to tighten.

At 20:26 GMT, June Comex gold futures are trading $1815.20, up $30.90 or +1.73%.

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Gold bulls appear to be showing no fear in adding to already established long positions ahead of Friday’s jobs report that is expected to show the U.S. economy added 990K jobs in April, while the unemployment rate declined to 5.8%,

There also doesn’t seem to be the same sense of urgency to dump Treasury bonds like we saw earlier in the year. If bond investors keep buying and yields continue to return to more reasonable levels, given the Fed’s stance, then gold will remain well supported.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend resumed early in the session when buyers took out $1799.50 and was reaffirmed later when the February 23 top at $1817.60 was taken out. The main trend will change to down on a move through $1754.60.

The market is now trading on the strong side of the long-term 50% level at $1788.50, making this level major support.

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Short-Term Outlook

Gold will remain in a bullish position as long at $1788.50 holds as support. A sustained move over the next swing top at $1817.60 will indicate the buying is getting stronger.

It looks as if the market has cleared the choppy trading area and is now poised to accelerate to the upside because of limited resistance.

Our work suggests that $1817.60 is the next potential trigger point for an acceleration to the upside with the February 10, 2021 top at $1858.90 the next major target.

Our long-term bullish outlook will dampen if the market retreats back under $1788.50. This will be an indication that the rallies are being fueled by short-covering rather than aggressive buying.

For a look at all of today’s economic events, check out our economic calendar.

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