Gold Prices Look to NFP's for Direction
- Gold Prices Look to NFP’s for Direction
- Price Consolidates in an Inside Bar Pattern
- IG Client Sentiment Reads +2.89; 74.3% Net-Long
After reaching a new weekly high for Thursday’s trading at $1,274.22, gold prices are now consolidating with the creation of an inside bar. As prices trade sideways, traders may use this technical information to plan for a potential breakout during tomorrow’s release of key US employment data. Expectations for tomorrows NFP (Non-farm Payrolls)(May) release are set at 180k. As one of the markets most watched economic events, traders may look for increased volatility from assets priced in the US Dollar including gold.
Technically with prices failing to trade to new highs or lows in early trading, traders may look for gold to close the day with the creation of an inside bar. As seen in the daily graph below, this suggests that Thursday’s daily candle may be referenced for values of support and resistance. Thursday’s high is found at $1,274.22, and may be considered as a point of resistance. Traders looking for a bullish breakout in gold will look for prices to trade above this value. Alternatively Thursday’s low is found at $1,259.67. This point may be considered as a value of support, with bearish breakouts occurring if prices trade graphically below it.
Gold Price Daily Chart & Inside Bar
Why and how do we use IG Client Sentiment in trading? See our guide.
Traders tracking sentiment should note that sentiment values for gold prices remain extreme going into tomorrow’s NFP event. Currently IG Client Sentiment reads at +2.89, which reveals that 74.3% of traders are currently net-long the commodity. When read as a contrarian indicator, an extreme net-long sentiment reading suggests that gold prices may decline. If prices breakout lower below support, traders should look for sentiment figures to remain at or near their positive extremes. However if prices breakout above resistance and begin to trend higher, sentiment figures may shift back towards more neutral values.
--- Written by Walker, Analyst for DailyFX.com
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