Gold extended downside movement on Thursday, dragging the price of yellow metal to less than $1325 ahead of the US nonfarm payrolls and unemployment reports. The precious metal has successfully printed a Higher High (HH) on the daily chart, confirming the bullish sentiment in the long run.
As of this writing, the yellow metal is being traded near $1321 an ounce. A support can be noted around $1312, the 38.2% fib level ahead of $1304, the 100 Simple Moving Average (SMA) and then $1287, the 50% fib level as demonstrated in the following chart. A break and daily closing below the $1287 support area could spur a deeper correction, threatening the $1240 swing level.
On the upside, the precious metal is likely to face a hurdle near $1342, the 23.6% fib level ahead of $1392, the swing high of the last major rally and then the $1400 milestone. The sentiment will remain bullish as far as the $1240 support area is intact.
US labor department is due to release the nonfarm payrolls report today in the US session. According to the median projection of different economists, the nonfarm payrolls declined to 212K in June as compared to 217K in the month before. Generally speaking, higher nonfarm payrolls are considered positive for the economy, hence better than expected actual outcome will be seen as bearish for Gold and vice versa.
The labor department will also release the unemployment rate figure today. According to the average forecast of different economists, the rate of unemployment remained steady at 6.3% in June as compared to the same rate in the month before, a worse than expected actual outcome will be seen as bullish for the precious metal and vice versa.
Considering the overall technical and fundamental outlook, buying the yellow metal on dips around the $1287 support area appears to be a good strategy in the long run as described above.