By Bhavik Patel
COMEX Gold recovered on softer-than-expected retail sales and weekly jobs claims data, but is still set for its biggest weekly decline in two months, owing to lingering uncertainty about the Fed rate outlook.
On Thursday, the U.S. Labor Department said that weekly jobless claims decreased by 8,000 to 212,000. The number was also below the consensus forecast, as economists were expecting to see jobless claims hold steady at 220,000. Another help for gold came from US retail sales. U.S. retail sales fell by 0.8% last month following a revised increase of 0.4% from 0.6% in December, according to the latest data from the U.S.
Commerce Department. Report indicates significantly slower growth for Q1 2024. This helped in gold recovering some of the losses and inching above $2000. January typically sees a decline in retail sales following the strong December holiday shopping season.
Still, the report falls into the camp of the U.S. monetary policy doves, who want to see the Federal Reserve cut interest rates sooner rather than later. Today’s US Producer price index (PPI) will be in focus after this week’s US CPI.
Technically, April gold futures saw short covering featured after prices hit a three-month low Wednesday. In MCX, 61000 again emerges as strong support and after strong correction, we are witnessing short covering which should continue till 62020-62050 where 20-day moving average is.
Silver has more room to the upside than gold because silver is in oversold region and Gold/Silver ratio also points to higher level. After strong red candle due to higher than expected US CPI, gold has been building base and in COMEX also have come up above $2000 which is sign of value buying and diminishing selling.
The follow up selling was not witnessed when gold breached $2000 on the downside but the slow and steady short covering indicates traders tentatively dipping their toes in long positions. Any correction around 61000 should be utilized as an opportunity to go long via options with expected target of 62050 and stoploss of 60500.
(Bhavik Patel is a commodity and currency analyst at Tradebull Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)