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Market News Gold firms as U.S. jobs data miss cements low rates view (With Trading Strategy)

Gold firms as U.S. jobs data miss cements low rates view (With Trading Strategy)

Gold investors turn bullish as prices break out above $1,800 an ounce.

LEO
2021-05-10
964

gold.jpeg


Gold prices inched higher on Monday to trade near a three-month peak hit last week after weaker-than-expected U.S. jobs data supported hopes that interest rates will remain low for some time, bolstering the metal’s appeal.


The spot gold rose 0.13% to $1834.82 by 15:50(GMT+8).


“The U.S. jobs report is pretty much the start and finish of the story for gold at the moment. It has really tightened expectations out of the market, at least at the margins of Federal Reserve rate hikes,” IG Market analyst Kyle Rodda said.


With the momentum to the upside, $1,850 will be the next key level to watch for gold, he added.


Data released on Friday showed U.S. job growth unexpectedly slowed in April, as businesses scrambled for workers and raw materials amid rapidly improving public health and massive government aid.


The 266,000 jobs that U.S. firms added last month were “nowhere near” expectations, a Federal Reserve official said.


The U.S. central bank has pledged to keep interest rates low until inflation and employment pick up.


Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar.


Indicative the dollar index languished near a more than two-month low.


Spot gold may test a resistance at $1,847 per ounce, a break above which could lead to a gain to $1,876, according to Reuters technical analyst Wang Tao.


Indicative of sentiment, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.6% on Friday.


Frustration is giving away to relief as sentiment in the gold market turns solidly bullish among Wall Street analysts and Main Street investors, according to the latest results from the Kitco News Weekly Gold Survey.


Positive sentiment in the precious metals market dramatically shifted Thursday when gold prices pushed above $1,800 an ounce for the first time since February. Many analysts noted that gold's solid break above what has proven to be a sticky resistance point is creating momentum in the marketplace that could push prices to $1,850 an ounce.


While a fuse has been lit under gold, it is not all clear sailing. Some analysts note that the precious metal could find some sticky resistance between $1,830 and $1,850 an ounce.


This week, 16 analysts participated in Kitco News' gold survey. Of those, 14 analysts, or 88%, said they were bullish on gold; at the same time, two analysts, or 13%, said they were bearish on prices next week. There were no neutral votes for the gold prices this week.


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Photo: KITCO


The renewed bullish sentiment, particularly among Wall Street analysts, comes as gold prices see their best weekly gains since early November. June gold futures last traded at $1,836.10 an ounce, up more than 3% since last Friday.


Ole Hansen, head of commodity strategy at Saxo Bank, said that because of the disappointing employment data, recent talk of the Federal Reserve potential tapering its bond-purchasing program by the end of the year is completely off the table for now.


He added that gold prices could continue to push higher as falling bond yields help and force some investors to cover their speculative short positions.


Although gold has broken out of its range, Hansen said that he also doesn't expect to see significant momentum until gold pushes above $1,850 an ounce, which represents an important technical retracement level as well as its 200-day moving average.


"Gold has made an important move, but it's still in a downtrend. However, I am bullish on gold based on this breakout," he said.


Adrian Day, president of Adrian Day Asset Management, said that while gold prices won't move up in a straight line, the market is well supported as the U.S. government continues to push its "wild spending" proposals.


"Gold remains under-owned, so it will rally as more investors take positions," he said.


As to how high prices could go, Darin Newsom, president of Darin Newsom Analysis, said that if prices can push above $1,842.90 an ounce, his next target is $1,894.


However, not all analysts are bullish on gold as some expect higher prices to attract some selling pressures, especially as the U.S. economy continues to recover from the COVID-19 pandemic.


Marc Chandler, managing director of Bannockburn Global Forex, was one of the contrarian voices in the latest survey. He added that the $1,850 area could prove to be a significant resistance point.


"The underlying signal is really that the economy is booming. So I would look to fade the gold rally as it approaches the $1,850-55 area," he said.


Trading Strategy (source: Trading Central)

Pivot: 1824.00


Our preference: long positions above 1824.00 with targets at 1851.00 & 1859.00 in extension.


Alternative scenario: below 1824.00 look for further downside with 1815.00 & 1806.00 as targets.


Comment: the RSI calls for a bounce.


Supports and resistances:

1868.00

1859.00

1851.00

1836.90 Last

1824.00

1815.00

1806.00

Guideline for Trading Central strategy 


Trend chart reading guideline


1. First look at the time period in the upper left corner of the chart: ·30MIN and 1H chart shows the trading suggestions for intraday ·Daily chart shows the market trend analysis in next 2-3 days


2. The blue horizontal line on the chart marks the pivot: pivot indicates the reversal of the market. When the price is above the pivot, it indicates an upward trend, when the price is below the pivot , it indicates a downward trend. When the price breaks through the pivot, the trend is reversed.


3. The red and blue thin curves in the Candlestick chart chart are technical indicators: Red line is MA20+Bollinger bands, Blue line is MA50. under the Candlestick chart chart are also the technical indicators: Blue line is RSI, Red line is 9MA;


4. The green horizontal line is the resistance level for a price increase, and is also the profit target for long orders; the red horizontal line is the support level for a price decrease, and is also the profit target for short orders.


How to use TC strategy?


1.[Pivot] is the reversal line of the market trend. When the price up the pivot line which means in Bullish, you can open a long position or Buy. on the contrary, when the price under pivot line which means in bearish. You ‘d better make short positions or Sell. 


2. [our preference] is the main trading suggestion for your reference. You can exit your trading refer to this target or close positions before it.


3. [Alternative scenario] is the plan B for your reference. 


4. [Comment] is the technical analysis of market trends and technical support for trading strategies. 


5. [Supports and resistance] Supports are levels where the price tend to find support as it falls.


Resistances are levels where the price tend to find resistance as it rises. So, exit before the trend reverse.

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