The US dollar surge was not only against the currencies, but commodities like GOLD and SILVER also felt the heat. GOLD recently traded lower after it failed to break the 200 moving average on the 4 hour chart.
It is trading around an important support area at present, and considering that we have a major risk event scheduled later during the NY session, there might be nasty moves in GOLD in the coming session. If the US nonfarm payrolls data exceeds the expectation, then there is a chance that GOLD might break the $1280 support level and trade lower.
Technically, there are two important trend lines on the 4 hour chart for GOLD. The first one is holding the downside in the pair, and currently coincides with the 61.8% fib retracement level of the last up-move from the $1240 low to $1342 high.
So, technically this support holds a lot of importance for GOLD. If sellers manage to pierce the mentioned level, then a run towards the $1260 support level is quite possible in the short term. Any further losses should take it towards the last low of $1240.
See how to trade the Non-Farm Payrolls with EUR/USD
One key thing to note here is that the RSI is around the extreme levels, so there is a chance that GOLD might bounce from the current levels. In that situation, initial resistance can be seen around the second trend line, which might act as a hurdle for buyers. Moreover, it also coincides with the 200 moving average, so sellers might take charge around 200 MA.
Overall, a lot will depend on the US NFP outcome. If it impresses one more time, then the US dollar might gain traction moving ahead
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Posted By Simon Ji of IKOFXÂ
