US Job numbers

Yesterday US posted better than expected job numbers. Market was not expecting any surprise but still job numbers took market by surprise. Even last month US posted better than expected numbers which were a stunner for market. US unemployment rate fallen from 13.3% to 11.1%. Non farm payroll added 4.8M jobs vs 2.6M last month. These astonishing numbers suggests US is recovering very very fast from Covid-19 effects.

Its clear now that we wont see great depression job numbers as many analysts were predicting in March-April. So now question arise, Is better than expected job numbers enough to say US is recovered and now future is bright ? Short answer is NO.

Just yesterday US detected more than 50000 corona virus cases. US biggest multiplex owner AMC postpone to open all cinemas from mid july. Now AMC will open fewer than expected cinemas from mid July. Many states are thinking to roll back restrictions and many already applying lockdowns as I write this piece.

Worldwide covid-19 cases already surpassed 10 millions and still detecting 150K+ cases worldwide. So its not appropriate to say its over. However many countries are going back to normal. NewZealand , South Korea and China already started their daily routine with no or fewer restrictions. So I would conclude its not over yet.

Uncertainty around virus infections and US-China tensions are main driver of gold prices. Even China & India border face off is pushing gold price higher. Despite extra ordinary job numbers gold did not fall because there is extreme uncertainty regarding virus and between US-China-India. These are main driver of gold price.

We still not recovering fast and many countries are clocking highest number of corona virus cases daily including India. So until unless virus cases goes below 100K daily worldwide , I would not be very comfortable. This year we have elections in US. I believe we have more action left in 2020. US elections will be an interesting race between Biden & Trump. So keep an eye on polling numbers as well.

Currently gold is trading at 1776$. Good support in weekly chart stands at 1700$. Once trader break and close gold price below 1700$. Expect more weakness in gold till 1600$ – 1500$.

Resistance in gold chart stands at 1821$. If trader break and close above 1821$ and uncertainty continues. Then expect gold to test 1900$ – 2000$ very soon.

Conclusion: Currently gold is in positive zone as uncertainty rising every single day. However gold will fall and fall would be very hard only if virus vaccine appears or cases fall below recovery rate for 1-2 weeks.

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By marafat