[To those who missed the GOLD surge] July 1–3 price movement and profit points that could have been targeted with support/resistance turn
1. The 3 Days GOLD surged in a single blast
Chick
GOLD moved quite a bit from July 1 to 3, didn’t it?
Those watching might have thought, “Huh, has it risen that much already?”
Reina
That's right.
This time GOLD rebounded significantly in a short period.
Until late June, GOLD faced heavy upside pressure due to expectations of U.S. rate hikes and a strong dollar.
However, once July began, the flow changed.
Buying returned to GOLD that had been sold, and it rose sharply from July 1 to 3.
According to Reuters, on July 3 GOLD was set for weekly gains on the back of weak U.S. payrolls, with spot gold briefly above $4,176 and U.S. futures around $4,188.
Chick
The pace suddenly shifted, didn’t it?
But why was it bought so much?
Reina
This rise was not just a coincidence.
There was a trigger that changed market views.
2. The trigger for the quick rebound was the U.S. employment data
Chick
Was the trigger the U.S. employment data after all?
Reina
Yes.
The big trigger was the U.S. jobs report released on July 2.
Nonfarm payrolls for June rose by 57,000, far below market expectations of 110,000. Moreover, May’s figure was revised down from 172,000 to 129,000.
Chick
When employment is weak, GOLD tends to benefit more?
Reina
In such a situation, yes.
Weak employment data
→ It becomes harder for the Fed to hike rates soon
→ Market expectations for U.S. rate hikes ease
→ The dollar tends to weaken
→ Gold priced in dollars becomes more attractive to buy
This is the flow.
In fact, in response to weak employment data, July rate-hike odds were reported to have fallen below 20%.
Additionally, a weaker dollar was supportive for GOLD, and Reuters noted that the dollar’s largest weekly drop since April was another factor behind GOLD’s rise.
Chick
I see.
So, behind GOLD’s sudden buying were employment data, rate-hike expectations, and a weaker dollar.
3. But could you have taken the move without knowing the context?
Chick
But not everyone can track the entire real-time story of employment data and the Fed, right?
So, did people like that miss this move?
Reina
No.
This is the main point I want to convey in this article.
Of course, understanding the market backdrop helps with judgment.
However, even if you didn’t grasp all the background, there were buy signals on the chart.
Chick
Buy signals on the chart?
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