Two trades to watch: Gold, DAX
Fiona Cincotta June 4, 2021 7:27 AM
Gold finds support on ascending trend line and looks towards US jobs data for further clues. The Dax futures head a few points lower but uptrend remains in place. Eurozone retail sales up next.
Gold looks to NFP report after strong ADP numbers
Gold prices continue to slide versus the US Dollar.
The greenback gained momentum yesterday after Fed taper talk and strong economic data prompting speculation that the US recovery is gathering pace.
ADP private payroll numbers came in well ahead of forecast at 978k (vs 650k expected) & after initial jobless claims fell to a fresh pandemic low of 385k. Separately the ISM non-manufacturing PMI surpassed forecasts at 64 as business activity ramps up.
All eyes are now on the NFP which is expected to show 650k jobs created in May and the unemployment rate is expected to slip to 5.9%.
Where next for Gold prices?
Gold appears to have found support on its ascending trendline dating back to the year to date lows in March. This trendline now acts as a key support and pivotal point. A move below this level at 1855 then exposes the 200 day ma at 1840. Sustained weakness below this level could open the door to 1815 ahead of 1800 round number and 50 day ma.
On the upside, should the ascending trend line support hold, resistance can be seen at 1875 late January high, ahead of 1900 round number and 1915 June high.
Dax edges lower, uptrend remains intact
European bourses are trading under pressure following tech led declines on Wall Street.
A trio of upbeat US labour market data fueled expectations of a stellar NFP number today and concerns that the Fed could move to tighten monetary policy earlier.
Eurozone retail sales for April are expected to show -1.2% MoM contraction, after jumping 2.5% in March.
Declining covid numbers in Germany, rising vaccine numbers and the easing of pandemic restrictions is underpinning sentiment.
Where next for the Dax?
The Dax failed in the previous session to extend through Tuesday’s all time high of 15690. Whilst the Dax futures are edging a few points lower ahead of the open, the sellers are not taking control of the overall trend which is bullish.
It would take a close below 15400 for the bears to negate the near term up trend. 15280, the confluence of the ascending trendline dating back to late October and the 50 day ma could also prove to be a tough nut to crack.
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