Gold may extend gains amid poor US employment data

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Gold price, US job data and US Federal Reserve trending points

  • Gold price rose, as soft ISM reports softened American Dollar and opened up rooms for further gains
  • Distressful US unemployment data may help gold to hold on above $1280 region, while the American dollar may falter below its key support level at 95.50
  • Crude oil price kept rising on safe haven, as the agreed output cut took place
  • Dovish comment from US Fed chair Jerome Powell jolted the US stocks, while evaporating the chances of further rate hike

Gold may extend gains amid poor US employment data and dovish FED talk

US unemployment data turned out to be extremely disappointing, which might help gold to extend further gains. Adding further strains to the USD dwindling, the Fed Chair Jerome Powell appeared to become much softer about his policy of aggressive rate hike, which had been inflicting the wounds all over US stocks.

In the wake of a higher recession risks and mounting corporate debts, US Fed might not hold on to their aggressive rate policy, which would eventually drag the American dollar downwards and bring an upswing for the US stocks.

As the American dollar has been weakening, the safe haven commodities like gold and crude oil may rise further. While this report was being prepared, the 4thof January, Friday, GMT 17.00, the American dollar had been found foundering below 95.60 and the Euro and GBP were mounting, residing at 1.1404 and 1.2727 respectively.

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Followed by a stack of dovish comments from Fed Chair, the US stocks started to surge, along with Gold price, which was residing on $1284.23, while the US crude had remained well supported above $48.10 per barrel.

Gold daily price chart

Gold daily price chart

Bottom Line

At this standpoint, in the face of a much-softened American Dollar and declined risk appetite among the investors, the Gold has been treated as a safe commodity along with safe haven currencies like Japanese Yen.

Gold price had been targeting to test its initial resistance at 1302.56-96, while a daily close above that point, might expose further gains above the $1323.50-90 territory. On the flipside, the key support zone for gold still remains at the $1278.56-96 territory, which seemed to be highly unlikely at this point and a higher market volatility is anticipated.

Read more on Gold outlook here

[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]

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