[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 all at once
Chick
GOLD moved quite a bit from July 1 to 3, didn’t it?
People watching might have thought, "Huh, it already rose that much?"
Rena
Yes, that’s right.
This time GOLD showed a strong rebound in a short period.
In late June, GOLD faced a heavy upper level due to expectations of U.S. rate hikes and a strong dollar.
However, once July began, the trend changed.
Buybacks entered GOLD that had been sold, and it rose sharply from July 1 to 3.
According to Reuters, on July 3 GOLD headed for weekly gains amid weak U.S. employment data, with spot gold briefly at the mid-4,176-dollar range and U.S. gold futures around the 4,188-dollar range.
Chick
The trend suddenly changed, didn’t it?
But why was it bought so much?
Rena
This rise wasn’t just a coincidence.
There was a trigger that changed market views.
2. The trigger for the rapid rebound was the U.S. employment data
Chick
Was the trigger, after all, the U.S. employment data?
Rena
Yes.
The big trigger was the U.S. employment data released on July 2.
June nonfarm payrolls increased by 57,000, well below market expectations of 110,000. Additionally, May figures were revised down from 172,000 to 129,000.
Chick
If employment is weak, does GOLD tend to benefit?
Rena
In such a scenario, yes.
Weak employment data
→ It becomes harder for the Fed to raise rates soon
→ Expectation for U.S. rate hikes eases
→ The dollar tends to weaken
→ Gold denominated in dollars tends to be bought
This is the flow.
In fact, after the weak employment data, July rate-hike probability was reported to have fallen below 20%.
Also, a weaker dollar helped GOLD, and Reuters noted that the dollar’s largest weekly drop since April was another factor boosting GOLD.
Chick
I see.
In other words, behind GOLD’s sudden buying were employment data, expectations for rate hikes, and a weaker dollar.
3. But could it have been captured without knowing the background?
Chick
But, you know, not everyone can follow all real-time news about employment data and the Fed.
For people like that, could they have captured this move?
Rena
No.
This is the point we want to convey most in this article.
Of course, understanding the market background helps with judgment.However, even if you don’t grasp all the background, there were buying signals on the chart.
Chick
Buying signals on the chart?
(The rest is available to read for free.)