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Gold Trying to Hold Above 1200 Ahead of the NFP

The USD started the week with strength, but as we approach Friday’s NFP, we are seeing a better gauge of what the market is anticipating. Gold is starting to look bullish. Let’s take a look at the charts of this precious metal.

Before we do that, we should note that ADP employment data disappointed so that could be a reason that the USD is paring its gains from earlier in the week.

Gold (XAU/USD) 4H Chart 4/3

(click to enlarge)

Some choppiness: The 4H gold chart shows that in mid-March we saw gold rebound from around 1143 up to about 1220. Then at the end of last week we saw the USD starting to gain, and gold (XAU/USD) fell back below 1200 to 1180 to start this week.

Bullish Signs: As we can see in the 4H chart, price has now pushed back above 1200 as well as the 200-, 100-, and 50-period SMAs. The RSI tagged below 40, which showed some loss of bullish momentum, but it did not tag 30, which means lack of bearish momentum.

Price action looks poised to retest the 1220 high. Now, we will need the reaction of the NFP to assess the direction after the 4/3 session.

If price can close above 1220 to end the week, gold should be bullish the next week at least in the short-term.

Gold (XAU/USD) Daily Chart 4/3

(click to enlarge)

In the daily chart we can see that the recent dip in March missed the 1130, 2014-low. Then, after the bounce the market still has not shaken off the prevailing bearish outlook.
1) Price is still under the 200-, 100-, and 50-day SMAs.
2) The RSI is still under 60, which reflects maintenance of the bearish momentum.

Now, in the short-term, there is a bullish outlook, and if price breaks 1220, we should anticipate a rally towards the 1255 pivot. This would be in the context of a sideways market, which started to develop after gold hit the 1130 low back in Nov. 2014.

But as we can see, because of the prevailing bearish bias, if price closes below 1200 to end the week, the pressure will be on the low around 1180 with risk of break lower towards the 1130-1145 support area.