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Gold Price (XAU/USD) Continues to Breakdown, Looming US Jobs Data Now Key

Gold Price (XAU/USD) Continues to Breakdown, Looming US Jobs Data Now Key

Nick Cawley, Strategist

Gold (XAU/USD) Analysis, Price, and Chart

  • Gold struggles after breaking noted Fibonacci support.
  • US dollar under the microscope ahead of the latest US jobs reports.

The break lower in gold persists after the precious metal broke below the 50% Fibonacci retracement area around $1,764/oz. Gold printed a fresh two-and-a-half month low Tuesday at $1,750/oz. and currently trades just a handful of dollars above this level today. The current chart setup suggests that gold will struggle to break higher with the next area of support ($1,720/$1,724/oz.) around $40 lower than the current spot price.

US dollar strength continues to weigh on gold and the greenback may get a further boost today from a closely watched US jobs report. The latest ADP jobs data will be released at 12:15 GMT and is expected to show an increase of 600k new nonfarm private sector jobs in June.

US Dollar May Rise if ADP Jobs Data Supports Hawkish Fed Pivot

While today’s ADP report may move the dial marginally, Friday’s US NFP report will likely be the main focus for US dollar traders this week. The potentially market-moving monthly report is expected to show 700k new jobs filled in June, up from a prior month’s 559k.

For all market-moving news and data releases, see the DailyFX Economic Calendar

The daily gold chart shows the recent price fall has now pushed the 20-day sma below the longer-dated 200-dsma, a short-term negative signal, while the CCI indicator has moved out of oversold territory, leaving room for a further move lower.

Gold Daily Price Chart (November 2020 – June 30, 2021)

Gold Price (XAU/USD) Continues to Breakdown, Looming US Jobs Data Now Key

Client sentiment data show 84.75% of traders are net-long with the ratio of traders long to short at 5.56 to 1.The number of traders net-long is 7.54% lower than yesterday and 1.74% lower from last week, while the number of traders net-short is 28.62% higher than yesterday and 12.35% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.

What is Market Sentiment and How Does it Work?

What is your view on Gold – are you bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.