Non-farm payrolls released in February is increased by 510,000, which is the largest increase in six months. The data also showed that the unemployment rate fell from 3.5% to 3.4%, which is a 54-year low. In addition to the eye-catching data, another (PMI) released later was also strong: the index rose to 55.2 points in January. Its biggest monthly gain since mid-2020 which points to a clear recovery in consumer demand. The stronger-than-expected jobs report surprised traders who were banking on an imminent pause in the Fed's rate hike cycle and pushed the US dollar to reach to 102.91. This also led to the earlier drop of gold by more than USD 60. It is expected that gold may experience profit-taking in the short term.

But at the same time, I also understand that despite the well-performed non-agricultural employment report, Powell has not resumed his hawkish stance. It is worth noting that Powell also reiterated his statement that inflation has begun to slow. He expects inflation to fall sharply this year. Therefore, gold also paused from the recent sharp drop.

Last time I shared that gold is a long-term bullish technical pattern. The origin of this view is that on the monthly chart, gold experienced a long period of sideways consolidation, and then went up after a false breakthrough in December last year. At the moment, my personal interpretation is that after the market shakes away investors with weak defenses, it will rise sharply. Usually after this type appears, the upward force will be stronger by the general. In addition, this is only the first rising wave on the monthly chart. According to the theory, the third rising wave is the longest period among five. Therefore, the rising view of catching third waves is derived. However, the short-term decline provides an opportunity for long-term investors to buy. At the same time, it has also reached the support level of 1,800 - 1,830 technically mentioned many times earlier. At this stage, it is also suitable for buying, 1,780 and 1800 are all good points. The first goal is to look at the previous top of 1,900, and the second goal is the previous top of USD 2,000 or even higher. Under the condition of an upward trend, we must take advantage of the trend to follow the market and focus on buying at low positions. Even if gold falls to 1,680, it will still be bullish. Before the bottom of the upward force is not broken, the strategy will not be bearish.

Hugo Leong

Gold Analyst of Hantec Group