UPDATE ON COMMODITIES

#XAUUSD or #GOLD | 07/07/21

- The US economy created 850,000 jobs in June. It could be another nail in gold’s coffin. Gold prices attempted to move higher on Monday but failed to gain traction. The dollar rose again putting capping the upside in the yellow metal. The U.S. 10-year yield tumbled on Monday dropping 7-basis points following the softer than expected U.S. ISM service report. The newest employment situation report is negative for the yellow metal mainly because it strengthens the position of hawks within the FOMC. With strong labor market, there are higher chances that the Fed will normalize its monetary policy earlier. As a reminder, some of the central banks believe that the Fed has already reached its inflation targets. So, the labor market target is what’s left. Strong job gains in June moved the US economy much closer to achieving this Fed’s goal and erasing worries that came in the aftermath of the extremely disappointing April reading.

- Technical View: To the upside, if we can clear the 50 day EMA then it is likely we will go higher to fill the gap, sending gold towards the 1860. Short-term momentum has turned positive and generated a crossover buy signal also negative medium-term momentum is decelerating.

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