Rising Unemployment claims is concern
I wrote an article last month when gold was trading around 1950$. I mentioned declining unemployment claims may cause gold decline. Gold price tested 1840$ after my article. A sweet 110$ crash from 1950$. Last week US unemployment claims rose from 845K previous to 898K. Forecast was 810K.
Unemployment claims are up more than 50K in a week. More than 50,000 americans applied for unemployment claims compared to last week. This could be a saturation point in claims decline. If claims kept rising then we may also see rise in unemployment rate. Rising unemployment rate will pressure fed to push more liquidity into economy and we may see more side effects soon.
US govt & FOMC has pushed major money in economies. US budget deficit record $3 trillion+ during fiscal 2020. US economy may need more stimulus package to avoid major collapse. Congress & Senate talking about another stimulus package but its still hanging in between as president Trump kept changing stance.
Rising unemployment rate + More uncertainty towards stimulus package & election’s volatility may fuel gold prices higher. So keep an eye if you are in sell side.
I will asses this week’s unemployment numbers and will post an update on my youtube channels. You can watch daily gold analysis on my youtube channels. Join here for English. Join here for Hindi. However a major rise in unemployment claims may put numbers in million range again.
We are near 900K and one more push towards million could put all plans of revival on hold. US govt may need to push interest rate zero or below zero in order to survive the economy as govt cant keep giving stimulus package forever. US already has highest fiscal deficit since world war 2.
Currently gold prices are trading at 1909$. Good resistance in gold chart stands at 1960$. This is also a trend reversal level. If buyers break and manage to close above this level. Then expect buyers to take charge and gold may test upto 2000$ – 2060$ in short term.
Good support in gold chart stands at 1840$. If trader breaks and manage to close below 1840$. Then we may see good red in gold upto 1800$- 1740$.
Conclusion: Technically gold chart is in weak territory. But fundamentals reasons may be changing. So keep an eye on claims & unemployment rate.
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