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Gold Technical & Fundamental Analysis – June 2021

  

Gold (XAU) nosedived last month, recording a major decrease of more than 7% amid some key economic releases, including Nonfarm Payrolls, ADP Employment Change, Inflation news, and ISM Manufacturing data for the United States. The monthly technical bias remains bullish as the yellow metal printed a higher low and higher high in the recent move.  

Technical Analysis 

As of this writing, Gold hovers around $1792 an ounce. Should the price continue to increase, the precious metal might face some hurdles near the listed price levels. 

Resistance

$1831.2 – the 23.6% Fib level resistance

$1916.5 – the high of June 01, 2021

$2000.0 – the psychological number

 

Monthly Chart Source – Meta Trader 4

On the downside, the yellow metal might find some sustainability near the given price levels. 

Support

$1676.8 – the low of March 01, 2021

$1600.0- the psychological level

$1523.7- the Fibonacci retracement (38.2%)

U.S. Nonfarm Payrolls News

The U.S. Bureau of Labor Statistics released numbers for the U.S. Nonfarm Payrolls on June 04, 2021. FXStreet.com economists were expecting a reading of 650K for the NFP June data. However, the actual figures significantly deviated from the economist’s expectations and fell to 579K in June, as compared to a reading of 269K, in the month before. 

The Nonfarm payroll data holds critical importance for the U.S. economy. NFP numbers reflect vacant positions generated in the non-agricultural sector of the United States over the due course of time. Since the NFP news registered worsening stats, it could have become the reason for the gold price to rise. However, the NFP data didn’t help the yellow metal to regain its position. Instead, the gold kept on decreasing with every major economic news hitting the U.S. Market in June 2021. Thanks to multiple favorable economic releases that played their part in keeping the U.S. Dollar (USD) stand firm against the XAUUSD. 

Impact of U.S. ISM Manufacturing PMI, Inflation, and ADP Employment Change

The Institute for Supply Management (ISM) also released numbers for the U.S. ISM Manufacturing PMI News on June 01, 2021. FXStreet.com economists were not expecting any change in the U.S. ISM Manufacturing PMI news in June. According to the analysts, the U.S. ISM Manufacturing PMI new registered a reading of 60.7 in May, as compared to the reading of 60.7, in the month before. However, actual figures for the Manufacturing PMI new remained 61.2, up beating the economists’ expectations. 

Similarly, the U.S. Department of Labor Statistics released U.S. Consumer Price Index news on June 10, 2021. FXStreet.com economists were expecting the U.S. CPI news to register a reading of 0.4% in May, as compared to the reading of 0.9%, in the month before. However, the U.S. Inflation rate remained 0.7% in May, up beating the economists’ expectations. 

The U.S. CPI data reflects the movements between the prices of retail products, including goods and services. Not to mention, the U.S. CPI does not include the prices of volatile products such as food and energy to reach unbiased calculations. 

A controlled inflation rate enables the economy to prosper and suggests better conditions for the job market leading to improved consumer spending power. A high reading for the U.S. inflation rate seems to have helped the U.S. Dollar pushing down the yellow metal even further.

The U.S. ADP Employment change data released by the U.S. Automatic Data Processing; Inc. could be another reason for the bearish moment of the yellow metal. Economists were already optimistic concerning the employment change data for May 2021. The actual stats also remained better than economists’ expectations and registered a reading of 978K in May, compared to the reading of 622K, in the month before.

Weekly Overview 

On the weekly chart, the XAUUSD might face some hurdles near $1816.0, the high of February 21, 2021, ahead of $1846.8, the horizontal resistance, and then $1893.6, the Fibonacci retracement (23.6%). 

Weekly Chart Source – Meta Trader 4s

On the downside, the yellow metal might find some support near $1750.6, the low of June 27, 2021, ahead of $1720.7, the horizontal support, and then $1690.2, the confluence of a trendline and a horizontal support level.

U.S Retail Sales News

The U.S. Census Bureau anticipates releasing numbers for the U.S. Retail Sales data on July 13, 2021. The U.S. Retail Sales reading was -1.3% in the month before. However, economists have yet to forecast their estimate for the June Retail Sales Data. 

The U.S. Retail Sales data provides an estimate of the total sales volume of the retail sector. The percentage change in the monthly sale volume shows the performance of the U.S. retail sector over the given period. Generally speaking, a higher reading for the U.S. Retail Sales strengthens the U.S. Dollar and suggests a bearish trend for the yellow metal and vice versa.  

Conclusion 

Considering the price movement of the yellow metal over the past few weeks, it may be a better option in the short term if the XAUUSD was sold at around $1831.2. Due to the volatile nature of the market, however, prices may change and lead to different outcomes.  


Vantage does not represent or warrant that the material provided here is accurate, current, or complete, and therefore should not be relied upon as such. The information provided here, whether from a third party or not, is not to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any financial instruments; or to participate in any specific trading strategy. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. We advise any readers of this content to seek their own advice. Without the approval of Vantage, reproduction or redistribution of this information is not permitted.

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