Gold had its worst week in 7 weeks as the market closed bearish on Friday by 2.73%, crumbling below the $1,800 trading zone. The decline in the yellow metal came as a result of the dollar being bullish on the back of the U.S Non-farm payroll (NFP) report which reported the U.S. jobs and raised questions about the continuance of stimulus provided by the Fed to markets and the economy.
What you should know
- Sellers dominated the Gold market last week as bears gained more pressure on the back of the NFP report released by the U.S. The report gave strength to the U.S dollar index and this ultimately caused the sell-off in the price of Gold.
- Gold traded as low as $1,759.50 on Friday but the yellow metal recovered some parts of its loss by closing the week at $1,763.10 down 2.53% for the day. Friday also represented the biggest loss the yellow metal had gotten in about 44 days when the market crashed by 4.65%.
- The DXY, the trading symbol for the Dollar Index, was up 0.6% at 92.81 as gold futures on New York’s Comex settled. It hit a near two-week high at 92.85 earlier, after tumbling to a one-month low of 91.82 earlier in the week.
- The U.S. July jobs report issued on Friday cited the creation of 943,000 new jobs that brought unemployment down to 5.4%. Economists tracked by Investing.com had anticipated just 870,000 new jobs for July, and a jobless rate of 5.7% which is higher than anticipated and thus caused the spike in the dollar index.
- Since January, gold has been on a tough ride that began in August last year, when it came off record highs above $2,000 and started stumbling into a systemic decay from November when the first breakthroughs in Covid-19 vaccine efficiencies were announced. At one point, gold raked a near 11-month bottom at under $1,674 in March 2021. After appearing to break that dark spell with a bounce back to $1,905 in May, gold saw a new round of short selling that has taken the yellow metal back and forth between $1,740 and $1,800.
What they are saying
Philip Streible, precious metals strategist for Blueline Futures in Chicago stated, “It’s the vengeful dollar. DX is coming back in a way that’s delivering an excruciating blow to most commodities today.”
Bottomline
The yellow metal has gone from threatening to break $1,833 to struggling to hold its growth above the $1,750 trading zone, with many analysts predicting a further fall. Craig Erlam, Senior Market Analyst, UK & EMEA at OANDA states that “Should gold rebound off $1,750, then the key test to the upside will come around that previously reliable support level at $1,790. But a look at the momentum indicators suggests any corrective move may not yet be forthcoming. A break of $1,750 shines a light on $1,720 and $1,700, with $1,675 then interesting below that, should it get that far.”
The yellow metal has long been regarded as a hedge against economic and political troubles as well as inflation but that has not been the case. With the rising global inflation, Gold Year-to-Date performance has been negative by 9.24%. One would think in a longer timeframe, the yellow metal would have done well but in the last year, the precious metal is down 14.58% YoY and in the last 10 years, the yellow metal also failed to live up to expectations as it is down approximately 20%.
In other precious metals, Silver is currently trading $24,32 an ounce, down 4.78% for the week, platinum has fallen below the $1,000 trading zone to stand at $974.15, down 6.82% for the week and palladium is trading $2,627, down 1.39% for the week.
Awesome, because Gold was the best to trade I did take for the past two months now due to the obvious Bearish momentum of Tweezer Top. it will still go Short because a lot of bearish moves will resume this week, it will get to $1,752 this week.
Awesome, because Gold was the best to trade I did take for the past two months now due to the obvious Bearish momentum of Tweezer Top. it will still go Short because a lot of bearish moves will resume this week, it will get to $1,752 this week.