Key Highlights
- Gold price failed to continue above $1,600 and declined heavily against the US Dollar.
- There was a break below a crucial ascending channel with support near $1,571 on the 4-hours chart of XAU/USD.
- The US ADP Employment increased 291K in Jan 2020, more than the 156K forecast.
- The US Initial Jobless Claims for the week ending Feb 01, 2020 could decline from 216K to 215K.
Gold Price Technical Analysis
After a steady rise, gold price failed to gain strength above the $1,590 level against the US Dollar. The price traded as high as $1,593 and recently started a strong decline.
The 4-hours chart of XAU/USD indicates that the price broke a few important supports near the $1,580 and $1,575 levels. Besides, there was a break below the 50% Fib retracement level of the upward move from the $1,535 low to $1,593 high.
More importantly, there was a break below a crucial ascending channel with support near $1,571 on the same chart. Finally, it broke the $1,560 support and the 100 simple moving average (red, 4-hours).
It tagged the 76.4% Fib retracement level of the upward move from the $1,535 low to $1,593 high and remained above the 200 simple moving average (4-hours, green).
On the downside, the main support is near the $1,535 swing low. If gold price fails to stay above the $1,535 support, there is a risk of more losses. The next key support is seen near the $1,505 and $1,500 levels.
Fundamentally, the US ADP Employment Change figure for Jan 2020 was released by the Automatic Data Processing, Inc. The market was looking for an increase in jobs by 156K in Jan 2020.
The actual result was better than the forecast, the US private-sector employment increased by 291K from December to January, on a seasonally adjusted basis. The last reading was revised from 202K to 199K.
Commenting on the report, the vice president and co-head of the ADP Research Institute, Ahu Yildirmaz, stated:
Goods producers added jobs, particularly in construction and manufacturing, while service providers experienced a large gain, led by leisure and hospitality. Job creation was strong among midsized companies, though small companies enjoyed the strongest performance in the last 18 months.
Overall, gold price is back in a bearish zone, but it could bounce again from $1,535. Besides, both EUR/USD and GBP/USD started a strong decline recently.
Economic Releases to Watch Today
- European Central Bank’s President Christine Lagarde’s Speech.
- US Initial Jobless Claims – Forecast 215K, versus 216K previous.
