Gold Price Futures (GC) Technical Analysis – Bulls Hoping for Drop in Average Hourly Earnings

Gold futures are edging lower on Friday as weak longs took profits and squared positions ahead of today’s U.S. Non-Farm Payrolls report, due to be released at 12:30 GMT.

The jobs report is expected to show the economy added 328,000 jobs in May, down 100,000 from April, according to a Dow Jones survey. Consensus estimates call for wages to rise by 0.4%, a faster pace than April’s 0.3% increase. The Unemployment Rate is expected to have dipped to 3.5%, down from 3.6%.

At 09:11 GMT, August Comex gold is trading $1866.90, down $4.50 or -0.24%. On Thursday, the SPDR Gold Shares ETF (GLD) settled at $174.35, up $2.12 or +1.23%.

Traders, but more importantly, the Fed will be monitoring the average hourly wages number very closely. A higher-than-expected reading might signal that the Fed has to be more aggressive with policy to put pressure on inflation. This could put renewed pressure on gold prices.

A weaker-than-expected number could support those who believe a recession in the U.S. is imminent. This could encourage central bank policymakers to ease policy sooner-than-expected, which could be bullish for bullion.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Thursday when buyers took out a pair of main tops at $1867.90 and $1875.00. A move through $1830.20 will change the main trend to down.

On the upside, the nearest resistance is a pair of 50% levels at $1890.00 and $1900.30. The latter is a potential trigger point for an acceleration to the upside with a main top at $1917.60 the next potential target.

On the downside, support is clustered at $1854.80, $1844.00 and $1835.50. The latter is a potential trigger point for an acceleration to the downside.

Daily Swing Chart Technical Forecast

Trader reaction to $1871.40 is likely to determine the direction of the August Comex gold futures contract on Friday.

Bearish Scenario

A sustained move under $1871.40 will indicate the presence of sellers. If this move creates enough downside momentum then look for a break into $1854.80.

Since the main trend is up, buyers could come in on the first test of $1854.80. If it fails then look for the selling to possibly extend into the long-term Fibonacci level at $1844.00. If this fails then look for a further break into $1835.30, followed by the main bottom at $1830.20.

Taking out $1830.20 will change the main trend to down. This could trigger an acceleration to the downside with $1792.00 a potential target.

Bullish Scenario

A sustained move over $1871.40 will signal the presence of buyers. Taking out $1878.60 will indicate the buying is getting stronger. This could trigger a further rally into $1890.00, followed by $1900.30.

Overcoming $1900.30 will be a sign of strength. This could lead to a test of the main top at $1917.60.