(MENAFN- Khaleej Times)
A strong-than-expected US nonfarm payrolls report on Friday is likely to weigh on Gold prices this week, analysts say.
Gold prices fell on Friday as the dollar index gained ground against a basket of major rivals following the monthly jobs data. Spot gold dropped 3.6 per cent to $2,290.59 an ounce. Gold futures due in August tumbled 2.75 per cent, or $65.9 to $2325 an ounce, marking a loss of 0.9 per cent this week.
Gold also lost altitude after newswires reported that the People's Bank of China paused its purchases in May after 18 months of nonstop buying.
Gold price shows more bearish bias to start pressing on $2300 barrier, reinforcing the expectations of continuing the bearish trend on the intraday basis.“Our waited target is located at 2272.06$, while holding below 2340.10$ represents major condition to the continuation of the expected decline,” analysts at economies said in a note.
However, analysts stress that overall, the long-term bullish outlook for gold has not changed.“Gold is still consolidating, and the news will likely prolong that phase. My initial thought is that China, a major driver of the gold rally in the past year, is nowhere near done buying gold, but the pause also highlights they are humans, baulking at the prospect of paying record prices,” Ole Hansen, head of commodities strategy at Saxo Bank, wrote in a note. From a technical standpoint, the key area of support remains around $2275, the May low and 0.382 Fibo of the run up from February, he added.
The PBOC's gold reserves remained at 72.80 million troy ounces. Recent trends show a reduction in the PBOC's monthly purchases: 60,000 ounces in April, down from 160,000 in March, and 390,000 in February. April imports also dropped 30 per cent from March, data showed.“This shift in China's demand poses a risk for gold bulls, suggesting potential declines. Meanwhile, UBS has revised its gold price forecast for 2024 to $2,365, with a year-end target of $2,600 and a projection of prices exceeding $2,800 over the next two years, indicating a positive long-term outlook despite potential easing banks' recent rate cuts, like those by the Bank of Canada and the ECB, are also limiting gold's losses. Gold needs to break above $2,375-80 to target $2,400 and $2,420. Meanwhile, it needs to hold above the 50-day MA at $2,340 to avoid further declines, with support around $2,315-25 zone and $2,300 levels,” Vijay Valecha, Chief Investment Officer, Century Financial, said.
Generally, a strong US dollar (due to a strong US jobs report) can put downward pressure on gold prices.“This is because gold is often seen as an alternative investment to the US dollar, and when the dollar strengthens, investors might be less inclined to buy gold,” Mohamed Hashad, Chief Market Strategist, Noor Capital, said.
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