Article by: ETO Markets
Gold prices (XAU/USD) lost some momentum below $2,400 as the People's Bank of China suspended gold purchases for the second month in a row. China held 72.8 million Troy ounces of gold at the end of June, unchanged from the end of May, according to official data. The decision by China, the world's largest consumer of gold, has weighed on gold prices. Market expectations of a Fed rate cut in September could limit the downside for gold. Friday's U.S. Non-Farm Employment Change data was strong, with 206,000 new jobs created in June, above expectations of 190,000. However, the unemployment rate rose to 4.1%, while average hourly earnings growth slowed to 3.9%, in line with expectations. The data reinforced market expectations of a rate cut by the Federal Reserve. In addition, the results of the French parliamentary election indicate that parliament may be in limbo, increasing political uncertainty and thus supporting safe-haven demand for gold. Investors will also be watching Federal Reserve Chairman Jerome Powell's testimony on Tuesday for more clues on future monetary policy.
Technical analysis shows that the relative Strength index (RSI) remains above the mid-50 line, indicating that the market remains bullish and remains above the upper Bollinger band track. If gold buyers regain momentum, the first upside resistance for gold is at $…, followed by $… and an all-time high of $…. In the event of a pullback, initial support is in the $… area near the 50-day Simple Moving average (SMA). A break below this support level could lead to a further fall to the lower Bollinger band of $….
