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Gold extended upside movement on Friday, increasing the price of yellow metal to more than $1255 an ounce after a pullback yesterday following the release of US Jobless Claims data. The technical bias has turned bearish because of a Lower Low in the recent downside move.
Technical Analysis
As of this writing, the precious metal is being traded near 1256. A hurdle may be noted near $1261, a key horizontal resistance level as demonstrated in the following four-hour chart ahead of $1288 which is the swing high of last major upside rally.
On the downside, the yellow metal is likely to find a support near $1243, the intraday low of yesterday as well as a major horizontal support level ahead of $1233, another major horizontal support area. The technical bias will remain bearish as long as the $1288 resistance area is intact.
US Jobless Claims
Filings for U.S. unemployment benefits declined last week from a more than one-year high, as a plunge in New York returned claims to a level consistent with a firm labor market.
Applications dropped by 16,000 in the week ended May 14, the biggest decrease since early February, to 278,000, a Labor Department report showed Thursday. The median forecast in a Bloomberg survey called for 275,000. The decrease was primarily due to fewer filings in New York after a surge the previous week that probably reflected difficulties adjusting for the spring break holiday. A subdued rate of dismissals, along with steady hiring, shows companies have confidence in the demand outlook.
Trade Idea
Considering the overall technical and fundamental outlook, buying the precious metal around current levels could be a good strategy in short term.
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