Gold Drops Sharply on China News, NFP in Focus

During European trading on Friday, the price of gold experienced a sharp decline following news that China’s central bank had halted gold purchases last month after acquiring the yellow metal for 18 consecutive months.

The price retreated from its recent three-week high of $2387, registering a loss of approximately 1.7% during the European session.

This fresh weakness negated the initial positive signal seen from Thursday’s close above the recent range top and the pivotal barriers at $2363/66 (daily Kijun-sen / 38.2% Fibonacci retracement of the $2450/$2314 bear leg), shifting the near-term focus to the downside.

Key near-term support, represented by the top of the thick daily Ichimoku cloud (which had previously withstood several attacks over the past two weeks), is under pressure once again. The overall daily chart still presents a negative picture, with strong bearish momentum and a south-heading RSI, increasing the risk of a breach to the downside following the stall in recovery and subsequent weakness.

The US jobs report is expected to provide a strong directional signal and serve as another key driver of gold prices today.

Res: 2347; 2362; 2387; 2398
Sup: 2312; 2300; 2277; 2222