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James Hyerczyk
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Gold

Gold futures are trading lower on Thursday, nearly retracing all of the previous session’s range. Traders continue to wrestle with the long-term 50% level at $1788.50. This price is controlling the direction of the market.

The U.S. Dollar is edging lower against a basket of major currencies. The price action is likely being manipulated by the Euro, which is being influenced by the European Central Bank’s (ECB) monetary policy decision.

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Treasury yields are also firming, which could be a reaction to the better-than-expected weekly initial claims data that was released at 12:30 GMT.

At 13:11 GMT, June Comex gold futures are trading $1784.00, down $9.10 or -0.51%.

European Central Bank Leaves Rates, Policy Unchanged

The European Central Bank (ECB), as expected, left interest rates unchanged and made no changes to its bond-buying efforts on Thursday while market players look for clues on when its massive monetary stimulus might start to be wound down.

“The Governing Council decided to reconfirm its very accommodative monetary policy stance,” the ECB said in a statement on Thursday.

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Dollar Trade Stalls

The U.S. Dollar was pinned near multi-week lows against most major currencies on Thursday as traders assessed the potential impact the ECB’s decision on the U.S. Dollar and the potential influence of today’s weekly initial claims report on U.S. Treasury yields.

The U.S. Dollar Index is still holding above Tuesday’s technical reversal bottom at 90.840 which could be a sign that the selling pressure is slowing, or that buyers have returned.

Jobless Claims Fall Again as Employment Picture Gains Strength

The U.S. jobs market recovery accelerated its pace last week as fewer Americans headed to the unemployment line, the Labor Department reported Thursday.

First-time claims for unemployment insurance totaled 547,000, well below the Dow Jones estimates for 603,000 and a new low for the COVID-19 pandemic era.

The total represented a further decline in claims and gets the jobs picture closer to where it was pre-pandemic, though there’s still plenty of distance to cover.

Despite the drop in claims, Thursday’s report showed that both unemployment and underemployment remain significant problems for the U.S. economy.

Daily Forecast

Traders are going to continue to monitor yields and the U.S. Dollar but the direction and the price action will ultimately be determined by whether investors will continue to be willing to chase the market higher or if they are going to wait for the dips.

The rally we are seeing is not expected to be a long-term move. The economy is going to improve and interest rates are going to move higher. The U.S. Dollar is also expected to firm over the long-run as long as the U.S. economy continues to improve at a faster pace than other countries.

Furthermore, there are rumors that the Bank of Canada, and the Reserve Bank’s of Australia and New Zealand are moving toward raising rates sooner than expected and this is not bullish for gold.

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