Gold testing 1390 ahead of Powell s testimony

Gold is moving lower for a fourth straight session on Tuesday as it heads back towards Friday’s post NFP low.

Friday’s significantly better than expected NFP sparked a sell off in gold. With no economic data released on Monday and nothing scheduled for today, gold bears are controlling the precious metal as investors look ahead to Fed Chair Powell’s semi-annual testimony before Congress tomorrow.

Make no mistake, this is without doubt the most important risk event for gold across the week. Fed Powell’s comments could determine gold’s direction for not just the next week, but up until the July FOMC meeting at the end of the month.

Non yielding gold had rallied prior to the NFP as rate cut expectations were running high. Lower interest rates boost demand for gold as the opportunity cost of holding a non-yielding asset declines.

Friday’s NFP adjusted market expectations of a rate cut by the Fed. Job creation smashed expectations raising questions over whether the US economy was as weak as the market feared.

What to expect from Powell?
Investors will be looking to Fed Powell for guidance as to whether a July cut is necessary at all given the health of the labour market. Gold bears are optimistic that a rate cut will be pushed out until September or that Jerome Powell will indicate that a rate cut in July will be a one and done job. An optimistic sounding Powell could see gold dive as investors push back a rate cut.

Gold bugs will be looking for more understanding as to why the Fed went from talking about tightening monetary policy in February to 8 FOMC members voting for a rate cut this year in the most recent meeting. There is a good chance that Powell will focus on the risks facing the US economy. Let’s not forge that Jobs are a lagging indicator.
Should Fed Chair Powell focus on the risks ahead then gold could quickly push back above $1400 back towards $1440 as investors put the rate cut firmly back on the table.

Gold levels to watch:
Gold is currently testing support at $1390 after falling for 4 consecutive session. It is below its 100 sma on the 4 hr chart. A breakthrough $1390 could see gold test last week’s low around $1380 before is tests $1360.
On the upside resistance can be seen at $1405, prior to $1425 and then on to the year to date high around $1440.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.