Gold Prices tightens Up for a Move as US Jobs Data Steers.

Gold prices are perched a top support in the 1755-65 congestion area. Positive RSI divergence warns that downside momentum may be fizzling. This may imply a digestive period before the bearish trend resumes, but it may also be setting the stage for an upturn.

Immediate resistance is in the 1797.63-1808.40 area. A daily close above that may set the stage for a move higher toward 1850. Alternatively, a daily-close-confirmed break of support may touch off a slide toward the March bottom at 1676.10, with some friction near 1720.80 possible along the way.

Gold prices held up well despite potent selling pressure in the wake of US ISM manufacturing data. While growth slowed and employment shrank, overall activity levels held up near multi-year highs. Meanwhile, input prices surged. The markets seemingly took this to mean that the stage is setting for an upshift in the timeline for stimulus withdrawal.

Bullion eked out gains even as this backdrop buoyed front-end yields and the US Dollar. The absence of follow-through may speak to hesitation as the release of June’s US jobs report looms large ahead. Traders may have simply shied away from dictional commitment before the weighty data crosses the wires. It too is likely to be judged through the prism of Fed policy expectations.

GOLD SPOT / USD Dollar 1Day Chart

USD/CAD on the fence ahead of US jobs report

USD/CAD was up earlier to a high of 1.2449 but is now tracking lower to the lows for the day at 1.2418 as the loonie regains some momentum after a sluggish week against the dollar, despite higher oil prices in the lead up to the OPEC+ decision.

That may tell us quite a bit of how solid the dollar’s performance has been and from a technical perspective, it has seen USD/CAD break above 1.2400 and even its 100-day moving average (red line) once again – after having briefly done so in June.

Last month, the break against the latter technical level was short-lived as buyers failed to get close to contest the 1.2500 level and so the highs then @ 1.2481-87 offers a key resistance region going into the US jobs report later today.

Given the hawkish tilt by the BOC, you’d have to figure that the latest bounce since mid-June owes much to a technical rejection of 1.2000 at its first attempt.

But if the BOC is going to play it slow now that the Fed itself is starting to turn the other cheek, then loonie gains may be less straightforward to come by than it was in the opening five months of the year.

If we break back above 1.2500, I can see this heading towards the 200-day moving average (blue line) @ 1.2670 next.

That said, with the BOC likely to push forward with its agenda, the Canadian economy looking more optimistic, and oil prices to stay more upbeat, it is tough to fit the solid fundamental backdrop that is supporting the loonie at the moment.

The loonie is holding its ground in European trading

10-year Treasury yields continue to drift below 1.50% ahead of payrolls data

Despite the unrelenting dollar strength over the past few days, bonds have not really conformed to that view with 10-year Treasury yields sitting below 1.50% still today.

The next key catalyst for a move will come from the NFP release but will it really change the picture all too much?

There is a good argument that a strong report will see yields tick higher but with the lack of appetite shown this week, I’m still on the fence if the release later will be a turning point for the bond market.

Don’t get me wrong. The turn will come eventually and yields should rise as the Fed looks towards tapering and shift towards raising rates either in 2022 or 2023.

That will make shorting the yen rather attractive from a structural perspective but the technical side of things is still looking rather iffy for now with regards to Treasury yields.

The bond market has been tentative in trading this week.

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