Declining Unemployment claims

 

US reporting decline in unemployment claims since few weeks. Last week US unemployment claims to 860K from 893K previous. We are seeing a declining curve in jobless claims which is a very good sign for US economy. Less people are filing for jobless benefits which means many people are returning to jobs and economy is on track.

Even unemployment rate crashed from 10.2% in July to 8.4%. We have entered in single digit in unemployment rate and even if US unemployment stick here, it will be a very good sign for economy. Declining unemployment rate is a green sign for US economy and it could hamper historic bull run in upcoming weeks.

Currently gold price is trading higher as uncertainty of covid-19 is still playing in market. No vaccine on site and rising corona virus cases keeping gold from crash despite declining unemployment rate & rising economies around the world. Few weeks back Nasdaq & S&P500 index hit fresh lifetime highs and yet gold remain stable without major crash.

Current euphoria in gold price seems to subside and market may be in consolidation period, Gold investors and traders could be waiting for even clear signal. Currently uncertainty of US elections & deteriorating US-China relations are in play which is keeping gold prices higher.

After US elections in November we should see more clear path for gold price. No matter who is elected president after November , market uncertainty will be over by November end and I believe US-China’s relation could be better by the end of this year.

Next we have to see how much aftermath we will see in post covid world. Fed spend trillions of dollar in order to support US economy.  FOMC chairman already cleared way of lowest interest rate till 2022 last week. One thing which is in favor of US government is interest cost. Due to lowest interest rate , cost of trade deficit will be lower and it will benefit US economy in short term.

In short gold has more reasons to crash than rise if everything goes as it is. I have made case on basis of US economy which is main driver of gold & main consumer of dollar index. I am assuming US-China relation will be better by the end of 2020. I will update if there is change in this.

Technical levels according to chart is , Currently gold is trading at 1951$. Good support in this precious metal stands at 1870$. If trader break and close below this base. Then expect more pressure in gold till 1800$- 1750$.

Resistance in gold chart stands at 2030$. If trader breaks and close above 2030$. Then expect good rise in gold till 2080$- 2160$.

Conclusion: Currently gold trend is weak on chart and many economic indicators point out towards a weak gold price in upcoming months. Unless there is war or major change in current world.

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