Investors are gradually shifting to risky assets
Gold prices fluctuated in the trading session at the end of the week, when the most traded June futures contract was at 3,247.40 USD/ounce, down only slightly by 0.9 USD (equivalent to 0.03%) in the session on Friday.
This development comes after three consecutive sharp declines. Gold fell $27.2 on Tuesday, $28.4 on Wednesday and 50.9 on Thursday.
This three-day streak of declines has reduced June contract prices from Tuesday's opening price of $3,354.9/ounce to Thursday's closing price of $3,248.3/ounce, down a total of $106.6.6. Although prices decreased by 82.8 USD for the whole week, the end of the week was very quiet.
This week, the market received many important economic data. On Friday, the US Bureau of Labor Statistics announced that non-farm payrolls increased by 177,000 in April, exceeding MarketWatch's forecast of 133,000, but still lower than the adjusted March rate of 185,000 jobs.
At the same time, US-China trade negotiations have positive signals. China said it is considering a US proposal, but wants a 145% US tax cut that was imposed last month as a condition for negotiations.
This is the first signal that the world's two largest economies may be moving towards cooling down trade tensions, which has caused instability in the global market. In Europe, this information helps the stock market increase sharply as investors shift to risky assets.
In the US, stock indexes also recorded a strong week increase. Dow Jones increased 1,200 points (2.99%) to 41,317.43 points. Nasdaq composite increased 3.39% to 20,087.4 points. The S&P 500 increased by 2.92% to 5,686.66 points.
Technical analysis shows that gold prices may adjust further
Recent developments in gold have created a remarkable technical model on the weekly chart. For the week starting April 21, gold opened at $3,347/ounce and closed at $3,330.2/ounce, down slightly by $16.8.8.
This creates a doji candle (a type of candle model in technical analysis, showing hesitation or balance between the buyer and seller on the market) - when the opening and closing prices are almost equal.
The meaning of doji becomes more obvious when considering the surrounding context. The previous week ( Starting on 14/4), gold increased by 86.4 USD, creating a strong green candle. Next week is doji, then this week is a large red candle - forming the Three River evening Star model (a very strong reversal of the candle to reduce prices), which is a sign of reversal in technical analysis.
To completely confirm this model, another red candle is needed next week, with higher and lower levels, and a candle located under the red candle this week. If that happens, it could be a sign of starting a deeper correction in gold prices.
