Spot gold prices are trading near their lowest levels in over a week Friday, with the market currently pausing at $1634. Prices have now corrected back nearly 80% of the move seen from $1624.40 on the 25 April to the highs posted at $1671.60 on 1st May. The negative bias continues ahead of this afternoon’s US jobs data, which is seen by many traders as the only real short term catalyst to revive hopes of a third round of U.S. Federal Reserve bond buying. The closely watched report is due at 1230GMT where non-farm payrolls are forecast to rise 165,000 in April whilst the unemployment rate is forecast to remain at 8.2%. A weaker than expected gain could see U.S. dollar prices decline and would, in turn, raise expectation levels of a third wave of quantitative easing (QE3) which would boost the appeal of gold. $1625 should provide a level of support should prices continue to decline before the U.S. data, whilst $1580 remains an important level below. $1680 remains the target on the upside if prices are to break out of their current range.
EasyForexNews Research Team