Gold Plunges Ahead of US Job Data

Gold extended downside movement on Thursday, dragging the price of yellow metal to less than $1210 ahead of US job data which is due later in the New York session. The technical bias remains bullish due to a Higher Low on the daily chart.

Technical Analysis

As of this writing, the precious metal is being traded near $1207 an ounce. A support may be seen near $1201, the 38.2% fib level ahead of $1190, the 50% fib level and then $1167, the swing low of the last major dip as demonstrated in the following daily chart. A break and daily closing below the $1167 support are could incite renewed selling pressure towards the $1131 support area.

Gold Plunges Ahead of US Job Data

On the upside, the pair is expected to face a hurdle near $1215, the 23.6% fib level ahead of $1238, the swing high of the last major upside rally and then $1250, the psychological number. The technical bias will remain bullish as long as the $1167 support area is intact.

US Jobless Claims

The US Department of Labor is due to release the jobless claims data today during the early New York session. According to the average forecast of different economists, the jobless claims remained 290K by the end of last week as compared to 298K in the week before. Generally speaking, higher jobless claims are considered negative for the US economy thus a better than expected actual outcome will be seen as bearish for the precious metal and vice versa.

Trade Idea

Considering the overall technical and fundamental outlook, buying the precious metal around the 1180 level appears to be a good strategy in short to medium term. The trade should however be stopped out on a daily closing below the 1167 support area.'
Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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