Gold prices surged on Friday, climbing nearly 1% to trade in the $2,360s. This bullish momentum was fueled by a potent cocktail of factors: escalating geopolitical tensions in the Middle East, concerns about the health of the U.S. labor market, and growing expectations of an earlier-than-anticipated pivot from the Federal Reserve on interest rates.

The breakdown of peace talks between Hamas and Israel in Cairo sent shivers down investors' spines. Images of Israeli armor massing around Rafah, the last major city in Gaza not yet devastated by conflict, underscored the heightened geopolitical risk. The U.S. withholding of military aid to Israel further stoked anxieties, raising questions about the potential for a wider escalation. This uncertain environment propelled gold, a traditional safe-haven asset, back into the spotlight.

Adding fuel to the gold fire were disappointing U.S. labor market data. Initial Jobless Claims for the week ending May 3rd came in significantly higher than expected at 231,000, compared to the forecast of 210,000. This follows on the heels of a weak Nonfarm Payrolls report for April, suggesting the U.S. economy may be buckling under the weight of the Fed's current hawkish stance on interest rates.

This data has reignited speculation that the Fed will be forced to change course sooner rather than later. While recent comments from Federal Reserve officials like Susan Collins and Neel Kashkari have leaned towards maintaining a hawkish stance to combat inflation, the market narrative is shifting. Globally, central banks are starting to sing a different tune, with Sweden, the Bank of England, and the Swiss National Bank all recently implementing or signaling rate cuts. The ECB is virtually guaranteed to follow suit in June, and even the RBA is adopting a more dovish tone. This shift in the global monetary landscape bodes well for gold, as falling interest rates make non-yielding assets like gold more attractive.

The XAU/USD pair has surged, marking the beginning of a short-term uptrend. Analysis of the 4-hour time frame chart reveals that gold has broken through the upper boundary of a minor trading range, indicating a sharp rally. This reversal in the sequence of price peaks and troughs suggests a bullish trend in the short term, with potential for further upward momentum.

Looking ahead, the gold price shows positive signs, with the possibility of reaching $2380.00. This reinforces expectations for a continued bullish trend in the upcoming trading sessions. Targets for upward movement are set at $2400.00 and $2431.44. The EMA50 indicator provides support for this bullish wave, which remains valid unless the price falls below $2325.90.

Analyzing the expected trading range, support is anticipated at $2355.00, while resistance is projected at $2375.00. The current bullish trajectory is influenced by declining interest rates, contributing to a rebound in prices. Further resistance is expected at levels around $2388 and $2397, with the potential for a retracement to $2357. Overall, price movements are forecasted to fluctuate between $2357 and $2388.

BUY GOLD

ENTRY PRICE : 2355

STOP LOSS  : 2325

TAKE PROFIT : 2431

The price of the precious metal is gleaming brightly, holding firm above a crucial $28.00 mark in Friday's New York session. This bullish momentum can be largely attributed to a growing belief among investors that the Federal Reserve will soften its hawkish stance and initiate rate cuts as early as September.

The winds of change are swirling at the Fed. The CME FedWatch tool is now flashing a 71% chance of a rate cut by September, a significant jump from 66% just a month ago. This shift in sentiment stems from growing concerns about the health of the U.S. labor market, which seems to be buckling under the pressure of the Fed's aggressive interest rate hikes.

Jobless claims data released by the U.S. Department of Labor painted a concerning picture. The number of initial claims for unemployment benefits for the week ending May 3rd surged to a troubling 231,000, the highest level in over eight months. Additionally, recent official data revealed the slowest pace of job growth in six months. This mounting evidence suggests the U.S. labor market is feeling the pinch of the Fed's tight monetary policy.

This scenario is music to the ears of silver bulls. As the Fed tempers its rate hikes, the attractiveness of non-yielding assets like silver increases. However, the U.S. Dollar Index (DXY) is proving resilient, stubbornly clinging to support above 105.00 despite the headwinds. Similarly, 10-year Treasury yields defied the downtrend, jumping to 4.49%.

Next week promises to be a data bonanza, with key releases like the Producer Price Index (PPI), Consumer Price Index (CPI), and Retail Sales data all lined up. The crown jewel of this data dump will undoubtedly be the CPI report, which will be instrumental in shaping market expectations for future Fed actions. A cooler-than-expected inflation reading could further fuel the rally in silver and accelerate the Fed's dovish pivot.

Looking at silver's recent performance, we see it entering a correction phase. It's expected to dip to around $28.00, which is now acting as a support level after previously resisting price increases. Once it hits this point, we anticipate a bounce back towards $28.90, supported by a bullish trend visible on the charts. If this momentum continues, we could even see silver reaching $29.80.

Recent market activity shows a renewed interest in buying silver, especially around the $27.8 mark, previously a tough spot for price increases. Now, it seems to be acting as a solid support. Additionally, silver has moved above the 20-period Exponential Moving Average (EMA), a positive sign for its upward trajectory. The Relative Strength Index (RSI) also indicates a bullish trend, further supporting the idea of silver's price going up.

BUY SILVER

ENTRY PRICE : 28.00

STOP LOSS : 27.400

TAKE PROFIT : 29.80

The New Zealand dollar (NZD) took a tumble on Friday, retreating from its one-month high against its US counterpart (USD). This decline comes as the US dollar finds renewed strength, fueled by recent economic data.

On Thursday, the NZD surged on the back of a surprise rise in US jobless claims data. This unexpected jump, reaching an eight-month high, reignited speculation that the Federal Reserve might be forced to cut interest rates later in 2024. However, the market narrative has shifted as investors now turn their attention to a fresh wave of US data releases and commentary from Fed officials for further clues on the future path of monetary policy.

The Reserve Bank of New Zealand (RBNZ) is anticipated to keep its benchmark interest rate unchanged at 5.5% during its upcoming policy meeting later this month. This aligns with the recent recommendation from the Organization for Economic Co-operation and Development (OECD) for the central bank to maintain a tight policy grip until clearer signs of inflation retreating towards its target emerge.

The domestic economic picture remains a mixed bag. While the manufacturing sector exhibited tentative signs of recovery in April, the broader economy continues to grapple with a prolonged recession.

From a technical analysis perspective, the NZDUSD price action suggests a potential resumption of the downtrend. The recent bounce above $0.60 was short-lived, and the currency's current decline indicates a possible retest of the $0.6000 and $0.5980 support levels. A decisive break below these crucial supports would strengthen the bearish case, potentially paving the way for a further descent towards $0.5915.

However, it's important to acknowledge that a surge above $0.6070 could stall the bearish momentum and trigger a potential upside reversal. The key for short-term traders lies in the support and resistance levels mentioned above.

SELL NZDUSD

ENTRY PRICE :0.6014

STOP LOSS : 0.6023

TAKE PROFIT : 0.6000

The U.S. dollar index (USDX) fluctuated upward in the Asian and European sessions on Thursday and then fell from highs after the release of the U.S. initial jobless claims data. Finally, it gave back all intraday gains and closed down 0.28%.

The latest initial jobless claims came in at 231,000 (higher than the expected 215,000 and the previous 209,000), marking the highest level since August last year. Prior to this data, the initial jobless claims have remained between 200,000 and 222,000 over the past three months. This is in line with recent signs of a gradual cooling of the labor market. As a result, market expectations for rate cuts warmed slightly, weighing on the U.S. dollar index.

However, this data has a limited impact on the rate cut expectation. First of all, compared to the initial jobless claims, JOLTs job openings and non-farm payrolls can better reflect the labor market situation which gains more attention from the market. Therefore, the initial jobless claims are not highly watched. The second is because this market is thin this week due to fewer economic data releases. Although the Bank of England announced its interest rate decision on Thursday, its impact is limited to the British pound and the British stock market. Other currency pairs reacted little to it. As a result, the market tried to seize every opportunity to trade based on expectations, and the initial jobless claims data is certainly a good choice.

Several Fed officials delivered speeches in the previous trading days. In summary, the current Fed is divided over interest rate cuts. Atlanta Fed President Daly spoke yesterday. Unlike other officials who commented on whether and when rates would be cut this year, she just talked about inflation and the labor market. Daly said that the current restrictive monetary policy is depressing economic activity, but more time is needed for the current restrictive rates to bring inflation down to the 2% target. She thought it is far too early to declare the labor market is weak. Daly shared a similar view with Powell who said last week that rate cuts are delayed but not ruled out.

The market has now begun to shift its attention to next Wednesday's U.S. CPI for April. The Fed has significantly tightened monetary policy compared to previous cycles. But the crucial real estate market has been more resilient to the tightening policy than it was, and this has been the underlying reason for the rebound in inflation in recent months. As it stands, this problem may be "temporarily" solved.

Looking at the model of new tenant rents and all tenant rents built by the Federal Reserve and the Bureau of Labor Statistics researchers, the rise in housing inflation in the first quarter is abnormal, and the downward pressure will come in the next few months. Data shows the Owners' equivalent rent of residences (OER) was 0.48% MoM in Q1 2024. This is important because the OER accounts for 33% of the core CPI, so such a decline would lower the core CPI by 0.06% MoM. It means that the variable would fall with the expectation that if more goods inflation cooled more than expected, then the core CPI inflation would fall from an expected 0.3% (MoM) to 0.2% or even lower.

In short, tenant rent and OER inflation (accounting for 43% of the CPI) may decline unexpectedly in the next 9 to 12 months, due to the lag in the data. As the Bureau of Labor Statistics' data on new tenant rents and all tenant rents are quarterly data, it may be right about quarterly changes but wrong about monthly patterns.

The market has now begun to gradually hold that expectation, which means that downward pressure on US indices will gradually increase over the next few trading sessions. It may be due in part to the unwinding of positions caused by the expectation as well as the growing rate-cut expectations.

In the 4-hour chart, the dollar index dropped back after hitting the top of the downward channel. At present, the U.S. dollar index sees strong resistance from the 0.236 Fibonacci retracement level as well as the upper edges of the downward and upward channels. These three resistance levels form a short-term "resistance zone". If the USDX breaks above the "resistance zone", it is expected to hit the top of the previous oscillation range (106.428). Strong support is at the bottom of the downward channel (104.942), and the key resistance is the 0.382 Fibonacci retracement line. A break below this line will open a new downtrend.

As for indicators, the base line of the Ichimoku Could is running horizontally, and the conversion line is above the base line. The current price has fallen below the base line. The market should watch whether the conversion line will follow the price. If it does, the U.S. dollar index will decline in the short term. If the price moves close to the turning line, the USDX will first rise and then fall. In the DMI, +DI and -Di are sticking together, and +DI is below -DI at 19.68, showing that the USDX will move up further before a downtrend.

Overall, the dollar index is likely to decline in the short term. Investors can short USDX after a rise instead of adding short positions in a downtrend.

Trading direction: Short

Entry price: 105.65

Target price: 104.397

Stop loss: 106.55

Support: 104.942, 104.397

Resistance: 105.714, 105.929, 106.428

During Friday's (May 10th) Asian session, spot gold ascended significantly, and it is now trading at $2350.

Released yesterday, last week's initial jobless claims exceeded expectations and reached a new high since November 2023, strengthening the rate cut expectation. Then, the USDX plunged and closed lower, with the 10Y bond yields falling below 4.5%, boosting the gold price. The market priced in and traded the rate cut expectation. However, I believe that the market is too optimistic, and precious metals are still in a stage of consolidation.  

Geopolitical situation: On May 9th, Ukrainian sources said they stroke an oil refinery nearly 1,200 kilometers deep into Russian territory by drones, according to the Global Times, citing AFP. According to Xinhua News Agency, Israeli sources told Xinhua on May 9th that the ceasefire talks in Cairo collapsed, and the Israeli army will continue to launch strikes in the southern Gaza Strip city of Rafah "as planned". Yemen's Houthi military spokesman Yahya Sarea said in a televised statement that the Houthis struck several ships related to Israel.

News: San Francisco Fed President Daly said that the restrictive interest rate needs more time to work. If the labor market deteriorates, the Fed may consider cutting interest rates. The Bank of England, as expected, "left rates unchanged" but stepped forward to interest rate cuts. The BOE Governor Bailey said a change in the Bank Rate in June is neither ruled out nor a fait accompli.

Data: According to the data from the U.S. Department of Labor on Thursday, as of the week of May 4th, the U.S. initial jobless claims were 231,000, the highest level since the week of August 26th and the third largest single-week increase since 2021. This figure exceeded the expected 212,000, and the previous reading was revised upward to 209,000. Moreover, the U.S. continued jobless claims rose to 1.79 million in the week of April 27th, the biggest increase in a month

Today's focus: Consumer Sentiment from the University of Michigan, Fed officials' speeches, and geopolitical situations.

Gold moved as expected yesterday. It oscillated in the Asian session and crossed through the previous oscillation range after the data release. The lowest level was $2303 and the highest level was $2347 yesterday. As we have mentioned, a breakthrough is approaching, perhaps just in the following two days. Investors can go long at $2306 and then take profits step by step. The profits will be tremendous by doing so. Now, gold has reached the previous high of $2352, and we expect another rise today with a strong sentiment. However, we should not chase the rising trend but try to go long after gold falls. The initial support will be at $2330 and further support should be near $2318. 

Gold surged by $41 after the initial jobless claims data, once touching $2347. Certainly, gold will maintain strong after crossing above the oscillation range. But as it has reached the previous high, we should not add short positions now. Instead, we can go short with small positions at $2355, and go long at $2330.

In the 1H chart, the MACD line crosses above the signal line and the golden cross widens. Gold enters the overbought area, and the bullish momentum is ending soon after being released yesterday. It is risky to chase the rising trend, as gold is more likely to retrace after a surge. In the 4H chart, the MACD line crosses above the signal line and the golden cross widens. Since it has not entered the overbought area, there is rising space above in a larger cycle. In the daily chart, the MACD line crosses below the signal line in the overbought area. However, these two lines are getting closer and tending to form a golden cross. In addition, overbought indicators eased, suggesting a balanced momentum from both sides. If gold crosses above $2352, it will move in a bullish trend. If it declines below $2330, it will then oscillate downward. We have to be clear that technical indicators are for reference in normal situations, and they will be invalid under extreme situations. Today, our trading range will be $2318-$2370, in which aggressive investors can buy low and sell high.  

Trading direction: Long

Entry price: 2318

Target price: 2365

Stop loss: 2313

Support: 2330.000/2318.000

Resistance:2352.000/2365.000 

During Friday's (May 10th) Asian session, WTI oscillated downward, and it is now trading at 79.2.

Yesterday, crude oil did not oscillate much and closed the daily chart higher after complex fluctuations. The stabilization with a long lower shadow on Wednesday supported the rebound yesterday and crude oil oscillated repeatedly. It reflected a cautious sentiment from investors, but crude oil still recovered from the decline. Then, crude oil rebounded to the upper area of February's oscillating range and turned it to strong support. In addition, the rebound was also boosted by the increase in the initial jobless claims. Furthermore, the decline in the USDX and the U.S. debt, as well as the collapse of the Palestinian-Israeli ceasefire agreement.  

The key will be the fundamental situation. Now, investors are waiting for further updates on the OPEC+ production cuts for the second half of this year. Since there is still a period from the June 1st ministerial meeting, crude oil needs a clear direction now. Crude oil is expected to maintain the oscillating pattern, and investors should be careful.

Data: According to the data from the U.S. Department of Labor on Thursday, as of the week of May 4th, the U.S. initial jobless claims were 231,000, the highest level since the week of August 26th and the third largest single-week increase since 2021. This figure exceeded the expected 212,000, and the previous reading was revised higher to 209,000. Moreover, the U.S. continued jobless claims rose to 1.79 million in the week of April 27th, the biggest increase in a month

Geopolitical situation: On May 9th, Ukrainian sources said they stroke an oil refinery nearly 1,200 kilometers deep into Russian territory by drones according to the Global Times, citing AFP. According to Xinhua News Agency, Israeli sources told Xinhua on May 9th that the ceasefire talks in Cairo collapsed, and the Israeli army will continue to launch strikes in the southern Gaza Strip city of Rafah "as planned". Yemeni Houthi military spokesman Yahya Sarea said in a televised statement that the Houthis struck several ships related to Israel.

Today's focus: Geopolitical risks and the OPEC+ meeting.

Yesterday, crude oil oscillated repeatedly with slight differences, suggesting a complex market sentiment and the market is also waiting before trading. However, the weak sentiment is improved significantly, and crude oil reaches the upper area of the February oscillating range at 79. Now, crude oil is testing the support, and if it stays above this level, crude oil will further test the resistance at 80.6. 

Technically, crude oil oscillated upward and crossed above the previous oscillating range at 79, closing the daily chart with a bull candle to achieve the second growth. Moreover, WTI starts to be stable and will rebound soon, which will be clearer if it rises above 80.6. In the 1H chart, the MACD line crosses above the signal line and forms a golden cross, but the two lines are getting closer. After the release of bullish momentum, more funds are needed to push up crude oil, and the pattern oscillates again. Without the boost from the news, crude oil will oscillate later. In the 4H chart, the MACD line crosses above the signal line, and the golden cross widens to the 0-axis. Meanwhile, the release of bullish momentum continues, and crude oil will test the resistance at the 60-day SMA. If crude oil stands above this level, further upper space will be opened, and investors should pay attention to 80. From the daily chart, crude oil closed higher after the previous gain with a long-lower-shadow, suggesting a rebounding trend. Therefore, we should go long after a retracement. In addition, the MACD line crosses below the signal line and forms a death cross, while the gap between these lines is narrower. Also, the bearish momentum will fade as crude oil enters the oversold area, and the bullish momentum is released. Investors should not chase the descending trend, and try to wait for the resistance near the upper area of the new channel. Today, our trading range will be 78.0-80.6, in which investors can buy low and sell high.

Trading direction: Short

Entry price: 80.600

Target price: 78.000

Stop loss: 81.100

Support: 78.000/75.500

Resistance: 79.000/80.600