Gold is currently trading near $1886, which is sharply lower than last week’s high of $1919.20 registered on June 1. Marginal recovery in the dollar index from last week’s low of 89.65 is keeping precious metals under pressure. Recovery in US 10Y bond yields is also adding pressure to prices.
Positive economic data is likely to keep a lid on gold prices. Economic data released today shows that China’s imports and exports grew again in May, but both missed expectations. Imports grew by 51.1 percent in May from a year earlier to US$218.4 billion, up from the 43.1 percent growth in April. China’s exports grew by 27.9 percent last month from a year earlier to US$263.9 billion, down from the 32.3 percent growth seen in April. China’s total trade surplus stood at US$45.53 billion in May, compared with US$42.85 billion in April.
However, concern about rising US wage pressures likely to support gold demand as a hedge against inflation. US May average hourly earnings rose +0.5% m/m and +2.0% y/y, stronger than expectations of +0.2% m/m and +1.6% y/y.
Other global economic data on Friday was mixed for precious metals. US May nonfarm payrolls increased +559000 weaker than expectations of +675,000. US May unemployment rate fell -0.3 points to a 14-month low of 5.8%, showing a stronger labor market than expectations of 5.9%. Also, Japan Apr household spending rose a record +13.0% y/y (data from 2001), stronger than expectations of +8.7% y/y.
According to the CFTC Commitments of Traders report for the week ended June 1, net long for gold futures dropped by 941 contracts to 2,13,701 for the week. Speculative long position rose by 560 contracts, while shorts also increased by 1501 contracts.
Gold prices are likely to face stiff resistance near $1896-$1920, while immediate support level is seen around 20 days EMA at $1878 and 50 days EMA at $1841
Dollar To Keep Gold Prices Under Pressure
Disclaimer: Mr. Abhishek Bansal is a new-age, first-generation entrepreneur, and the Founder Chairman of Abans Group, a quintessential diversified business group, providing expertise in Broking Services, Non-Banking Financial Dealings, Financial Services, Agri-Commodity Services, Warehousing, Realty & Infrastructure, Gold Dore Refinery & Manufacturing, and Trading in Metal Products, Pharmaceuticals, Software Development & Wealth Management.