Phillip Futures Gold Daily Outlook - Gold hovering near year-to-date lows after strong US labour market report next Friday, but pessimism may be over-warranted.


Gold Price Movements
Gold prices rebounded yesterday, rising +0.2% as the dollar weakened. Despite a substantial selloff in the greenback – the USD lost - 1.6% vs the euro and -0.9% vs the yen – gold managed to eke out less than proportionate gains, suggesting that gold bulls are not very convinced about a rally post stellar nonfarm payrolls last Friday.

Nonfarm payrolls last Friday were better-than-expected, with the figure change coming in at 280K in May, above the forecast value of 228K. That may have sparked some fears of a June hike, but regular readers of my commentary will know that I have advocated the rate raise to occur only in September. The Federal Reserve has left several hints that a rate hike in June is unlikely – this latest nonfarm payrolls number may be exceptional, but that’s all it is – an exception to the flux of disappointing 2015 data, and not a norm that begets the Fed to raise rates.

Gold prices are inching slowly downwards in what increasingly looks to be a downtrend. Gold bears may be eager to jump on the bandwagon at this point but the risk-reward levels, at present, deters me from entering too huge a position. The FOMC meeting next week may possibly be the biggest event for 1H2015 as the world waits with abated breath on the likelihood of a rate raise – expect prices to be very volatile next week. Whether the Fed eventually chooses to keep rates at status quo or hike them, gold is likely to move big and that could catch gold traders in unnecessary margin calls.

Rather, gold has been stagnant and moving sideways for some time now, so its next move will likely be long and protracted. The FOMC meeting next week could prove to be a perfect battleground for gold bulls and bears to settle their differences once and for all in deciding the next big direction of gold prices. Since the trend is likely to be intact for a substantial time, going in to ride the trend may prove a less risky strategy than trying to outguess the FOMC next week.

Real time Gold Prices (Showing in China Beijing Timing)
Resistance/support for gold is expected at $1,250/$1,100. (Read Report)

Source : Phillip Futures Pte Ltd

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