US dollar is weakening today and it is providing a boost for precious metals. Gold bounced off the $1,620 support zone yesterday for the third time since late-September and launched a strong recovery move. Precious metal is now testing a $1,650 resistance zone, marked with 200-hour moving average (purple line) and previous price reactions. Note that this is also the level where gold traded right before the FOMC meeting on Wednesday, meaning that gold price has completely erased post-FOMC weakness. In case of a break above this zone, an upward move may extend towards the next swing level in the $1,660 area. On the other hand, should bears regain control, a pullback to the $1,640 area may be on the cards.
NFP report release at 12:30 pm GMT today is a key event of the day to watch for gold traders. Powell stressed numerous times that the US labor market remains strong and gives the Fed reasons to continue to focus on inflation. However, softer reading may reignite market hopes for pivot and it would weaken USD and benefit gold. However, even a weaker NFP reading may not be enough to discourage Fed, next week's CPI print will likely have more significance.
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Source: xStation5
