Gold is continuing to tread water just below the $4,200 mark today, with buyers showing a little more life since overnight trading but still not enough to really change the broader technical picture.
The rebound from Monday’s sharp selloff is still very much lacking conviction, particularly as Treasury yields remain elevated – even if coming off the boil since yesterday. That suggests the overall assessment hasn’t changed all that much for the precious metal, although the near-term chart is starting to look a little more encouraging.
Looking at the hourly chart, gold has managed to climb back above its 100-hour moving average (red line) at around $4,164 currently. That comes after buyers have struggled against the key level several times over the past couple of sessions.
While that’s a modest positive for buyers, I wouldn’t get too carried away with that just yet.
The $4,200 level remains the first obvious test on the chart, followed by the 200-hour moving average (blue line) closer to $4,235 at the moment. Besides that, the $4,240 level will also offer some technical interest as it was previously a key support level before breaking down earlier in the week. As such, the region around $4,235 to $4,240 would need to be reclaimed before the short-term picture starts looking considerably healthier for gold.
But in zooming out, the daily chart tells much of the same story as yesterday.
Gold remains below its 61.8 Fib retracement around $4,241, while the 100-day moving average (red line) near $4,279 is still some distance away. On the downside, the recent lows near $4,100 continues to provide the first major line in the sand with the psychological $4,000 level sitting below that.
For now, this still looks very much like a consolidation after the heavy selloff on Monday rather than the beginning of a convincing turnaround.
And that brings us to the US jobs report later today.
A softer report could give gold buyers more room to build on the technical improvement in the near-term chart. But if the non-farm payrolls and wage numbers reignite the selloff in Treasuries and send yields higher again, the recovery below $4,200 may prove difficult to sustain.
With 10-year Treasury yields having touched 5.34% – the highest level since 2002 – this week before easing back, the reaction in the bond market may ultimately matter as much for gold as the payrolls number itself.
This article was written by Justin Low at investinglive.com.