Gold Trading in a Flag Pattern Ahead of the US Non-Farm Payroll
Gold is seen in the 1H chart trading in what appears to be a flag pattern after a slide that came after the FOMC meeting minutes revealed a lower chance of Fed monetary stimulus. A flag pattern can be seen as a weak correction and harbinger to further trend continuation.
The next key fundamental risk is the Non-Farm payroll, also in the context of whether stimulus can be shelved. Projected at 207K after a previous reading of 227K, if the NFP number comes out better than expected like 250K+, we should see USD strength and a bearish continuation in gold with a break below the flag pattern if it has not already done so leading up to the release. Consider however that liquidity can be limited due to the bank holiday on Friday, but low liquidity can sometimes lead to high volatility as well.
Ahead of the NFP, if the market continues to trade upwards, we can start seeing resistance between the 38.2% retracement and 50% retracement area (between 1638 and 1647). If the RSI also stays under 60, and then returns below 40 after the NFP, we should be seeing the first signs of bearish continuation.
The daily chart shows that the market is trading under the 200 day moving average and pushing below a “central pivot zone”. After the NFP, if there is no surprise to the downside like an under-200K reading, gold should continue to open up toward the 1560 an inner range support pivot, and possibly 1520, the outer range support.