Gold Rate Today, Gold Price on 7 July – Gold Price Forecast, Gold Price Outlook

Gold which was comfortably trading above $1900 got some shock after the US ADP employment report came stronger than expected. Market had not anticipated such a strong number and that is why when it came, we saw a sharp sell off in gold and silver. Gold crashed from $1927 to $1903 before stabilizing around $1910. 

For bulls, the good news is that $1900 has not been breached but today’s Non-Farm payroll data comes along the same line as ADP, then we can see sell off below the psychological support of $1900. Strong jobs data data falls into the camp of the U.S. monetary policy hawks, who want to see the Federal Reserve continue to raise interest rates.  

Traders will closely monitor the US Treasury bond yields, which recently reached their highest levels since June 2007, particularly for the 2-year note. If yields continue to rise following the release of US jobs data today, we might see more selling pressure in gold price although in MCX we might see some cushion in the form of weak Indian Rupee. The latest FOMC minutes also suggested some hawkish tone where the majority of the members thought it appropriate to keep rates between 5-5.25%, some members were supporting 0.25% increase.  The minutes also said almost all FOMC members agreed that further tightening of U.S. monetary policy will be needed this year.

If today’s jobs data comes stronger, we might see a rate hike at the following FOMC meeting after last time’s pause. Not just the strong US jobs market, but Institute for Supply Management (ISM) showed activity in the U.S. service sector strengthened far more than expected in June. Activity in the service sector expanded in June for the sixth consecutive month, and the sector has grown in 36 of the last 37 months, with the lone contraction seen in December of last year. On top of it, crude has also started rising which will increase inflationary pressure.

Technical Outlook: Gold

The recent low of 57,651 was when the momentum oscillator RSI_14 was showing a reading of 31 indicating an oversold region. From there we have seen gold recover to 58779 after which again we are seeing selling pressure. Now the reading of RSI_14 is at 39 meaning there is room on the downside compared to previous week where gold was in the oversold region. Gold rate is trading below the 20-day moving average since 22 May and has not been able to close above it. The hurdle continues to act as resistance and we believe gold may only see upside momentum if it can successfully stay above it for a couple of trading sessions.

Right now the 20-day moving average is around 58,800 so gold needs to sustain above 58,800 for bullish momentum. Right now we expect gold price to test the support of 57,800-57,600 and any bounce can be taken as an opportunity to go short with stoploss of 58,800 and target of 57,650. Today there is Non-farm payroll data so trade with hedge positions or keep the position intraday only.

(Bhavik Patel, Commodities and Currencies Analyst, Tradebulls Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)