Gold investment: today, another signal appeared! Beware of sudden changes in market sentiment! Is gold really on the rocks this time?

International spot gold traded at $1686 an ounce in Asia on Monday, after falling sharply in the previous session to a low of $1670.42 an ounce.

Spot gold rose as high as $1,715.79 an ounce at $1,713.26 and dipped as low as $1,670.14 to settle at $1,685.23, down $28.36, or 1.66 percent.

Meanwhile, COMEX gold futures for August delivery closed down $44.40, or 2.6%, at $1,683.00 an ounce, the lowest close since April 3 and down 3.9% for the week.

Spot gold fell $44.28, or 2.56 percent, last week, its biggest weekly drop since the week ended March 13.

Gold fell more than 1.5 percent on Friday as stronger-than-expected U.S. non-farm payrolls boosted expectations of a global economic recovery and reduced demand for safe-haven assets.

U.S. stocks rose more than 2 percent on Friday after a surprise 2.5 million new jobs were created in May. The dollar rebounded slightly against a basket of currencies, while oil surged more than 2 percent and spot gold tumbled nearly $30 to $1,670.

The intraday Treasury yield curve was the steepest in more than two years since February 2018, with the spread between two-year and 10-year yields widening to 72 basis points. Generally speaking, the spread between long-term Treasury bond yields and short-term Treasury bonds widens, indicating that investors are optimistic about the near-term economic outlook in the future. On the contrary, the flattening or even inversion of yields indicates that there is a short-term economic recession risk. As a result, analysts said it was another sign of renewed optimism about the OUTLOOK for the U.S. economy in addition to the stock market rally, and gold prices were hit hard by another sharp drop in risk aversion.

Bart Melek, head of commodity strategy at TD Securities in New York, said the stronger-than-expected nonfarm payrolls data, which showed a gain of 2.5 million jobs compared with a loss of 7.5 million, raised expectations of a U.S. economic recovery. Gold, meanwhile, has come under pressure from stronger U.S. Treasury yields and a slightly higher dollar, which means the opportunity cost of holding gold in a portfolio has risen.

However, RBC Wealth Management believes gold will return to its long-term upward trend.

‘In this very uncertain environment, gold remains very attractive and will be supported by geopolitical risk, currency depreciation, stock market correction and higher inflation,’ the bank said.

A recent rally in equity markets has put pressure on gold and, with expectations of an economic recovery growing as much of the world starts to return to work, reduced risk aversion has dampened gold’s upward momentum.

The bank said the short-term decline in gold would be temporary and that in the long term it was still looking at $1,800 an ounce by the end of the year, and predicted silver would rise to $18 by the end of the year.

Market will naturally follow the fed’s decision this week, market expectations the fed will keep interest rates unchanged, however, considering the latest non-agricultural data is strong, the fed may be relatively optimistic about the economic outlook, suggesting that will slow down the stimulus measures, if so, the price of gold may suffer further blow, and the dollar is expected to be strong.

Technical analysis:

The dollar

On the daily chart, the DOLLAR index struggled to a low, the MACD green momentum column narrowed slightly, and the KDJ random index edged higher, indicating a respite in the downward momentum of the dollar, followed by a rebound from the low.

On the 4-hour chart, the DOLLAR index extended its decline to a low of 96.44 before recovering a bit, but continued to struggle in a tight range around the lows. The MACD red momentum column expanded slightly and the KDJ random index rose, indicating a slight strengthening of short-term rally momentum, followed by a small rally.


On the daily chart, gold maintained the recent volatile pullback trend, breaking the 20-day moving average and temporarily supporting the 60-day moving average, MACD green momentum column enlarged, KDJ random index further lower, indicating that gold downward momentum is still strengthening, the coming further to a deeper pullback.

In the 4-hour chart, gold prices fell to a low of $1670.42 / oz and rebounded slightly. The MACD green momentum column narrowed and the KDJ random index was slightly on the upward side, indicating that gold’s short-term downward momentum would be suspended and a small rebound might follow, but the strength of the rebound was limited.

Fundamentals positive factors:

According to data from worldometers, as of June 8, Beijing time, more than 7.07 million cases and more than 400,000 deaths have been confirmed worldwide, including more than 2 million confirmed cases and 110,000 deaths in the United States.

Brazil’s President Bossonaro said On Saturday that the World Health Organization was “ideologically biased” and threatened to quit.

Former VICE President Joe Biden has clinched the Democratic nomination to face Donald Trump in the 2020 presidential election after securing 1,991 delegates, AP reported. Rising uncertainty over the U.S. election has fueled some risk aversion in the markets.

The DPRK will close its liaison office at the Kaesong Industrial Park because the ROK has allowed groups of north Korean defectors to send anti-DPRK leaflets to the DPRK, kCNA reported.

New claims for jobless benefits fell to 1.877 million on May 30, labor Department data showed On Thursday, while Economists polled by Dow Jones had expected 1.775 million. CNBC said it showed the worst of the coronavirus-related jobs crisis was over, but unemployment remained high. Since the coronavirus lockdown in mid-March, more than 42.6 million Americans have applied for unemployment benefits.

Fundamentals negative factors:

1.Friday’s (June 5) nonfarm payrolls data from the LABOR Department surprised the market. U.S. nonfarm payrolls unexpectedly jumped 2.509 million in May, the biggest monthly gain in U.S. history since at least 1939, with markets expecting an 8 million drop. The unemployment rate fell to 13.3% from 14.7% in April.

  1. U.S. President Donald Trump said on Friday that 2 million doses of coronavirus vaccine have been produced in the United States and are “ready to go” once scientists determine whether they are safe and effective. The New York Times reported on Wednesday that the Trump administration has selected five companies most likely to produce the vaccine. The companies are Massachusett-based biotech company Moderna, Oxford University and AstraZeneca, and the big three drug companies Johnson & Johnson, Merck and Pfizer.
  2. US government has cancelled a plan to ban Chinese passenger airlines from flying to the US after China said foreign carriers could fly there. But the new order limits Chinese airlines to no more than two flights a week to the U.S.
  1. U.S. soybean exporters struck a big export deal for the fourth straight day Friday, with the beans widely expected to go to China. China stepped up its purchases of US soybeans this week as prices rose for its main supplier, Brazil.

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