Gold ventured higher last week with prices clipping two week highs above $1354 as the lingering impacts of Friday’s soft second quarter US GDP figure of 1.2% encouraged investors to install a round of buying. The breakout above $1345 is quite significant with prices poised to trade towards $1370 as a combination of Dollar weakness and concerns over the global economy bolster Golds allure. Although the metal remains highly sensitive to US interest rate hike expectations, the persistent global uncertainty and overall risk-off trading environment could keep prices buoyed moving forward. Friday’s NFP report will be of great importance to where Gold trades and if the release exceeds expectations then the metal may be left vulnerable to losses. While a positive NFP could enforce some losses in the short term, Gold remains fundamentally bullish and the engine which is risk aversion should send prices to unchartered territories.
From a technical standpoint, prices are trading above the daily 20 SMA while the MACD has crossed to the upside. Previous resistance around $1345 could transform into a dynamic support which could encourage a further incline towards $1370.
US ISM Manufacturing in focus
Investors may focus their attention towards today’s ISM manufacturing PMI for the United States which is widely expected to remain around 53.1, signalling stability in the US activity. A positive report could ward away some of the anxiety from Friday’s soft GDP release which diminished some hopes over the Fed taking action this year. Sentiment is still somewhat bullish towards the US and could improve further if US data this week repeatedly beats expectations. Friday’s NFP remains key and a solid figure could reinvigorate some optimism over the Federal Reserve breaking the trend of central bank inaction.
From a technical standpoint, the Dollar Index still remains bullish on the daily timeframe and a breakout above 97.50 could open a path towards 98.00.
Yen bulls back in action
The Yen bulls were unchained last week following the BoJ under delivery of stimulus measures that followed a tradition of central bank caution which consequently renewed a wave of risk aversion. Japan continues to display signs of economic weakness while global instabilities have heavily exposed the nation to downside risks. Inflation remains a struggle while the domestic data such as GDP remains quite worrying. This combination of risk aversion and central bank inaction could strengthen the Yen further, consequently punishing the already fragile Japanese economy. From a technical standpoint, the USDJPY is turning bearish on the daily timeframe and the current downside momentum could pave a path towards 101.50.