Zhang Yaoxi: Geopolitical situation and non-farm data update, gold prices remain volatile or may rebound and strengthen

Zhang Yaoxi: Geopolitical tensions and non-farm data ahead, gold prices remain volatile with potential for rebound and strength
On the previous trading day, Thursday (March 5): International gold faced resistance and declined, recovering some of Wednesday’s gains, and retesting the middle band and other support levels. Although there was some support from buying interest, the trend remained weak until it stabilized above the 5-10 day short-term moving averages. Watch for support near yesterday’s low and around the 60-day moving average for potential long positions.
In terms of specific movement, gold opened at $5145.86 per ounce during Asian hours, initially rebounded, reaching an intraday high of $5194.34 at 11 a.m., then faced resistance and declined. During European trading, it moved sideways, and in the U.S. session, it continued to fall, hitting an intraday low of $5051.35 at the close. It then rebounded slightly, ending at $5081.03. The daily range was $142.99, down $64.83, a 1.26% decline.
The influence came from support buying and the escalation of Middle East conflicts, which increased demand for safe-haven assets, pushing gold to an intraday high. However, resistance and a strengthening dollar, along with U.S. February Challenger layoffs (in thousands) and initial jobless claims for the week ending February 28 (in thousands), were negative for gold. These factors cooled expectations of Fed rate cuts, causing gold to face resistance and turn lower at the close.

Looking ahead to today, Friday (March 6): International gold continued its overnight rebound at the open, strengthening initially. The U.S. dollar index was weaker early, providing some support. Additionally, tonight’s U.S. non-farm payroll data is generally bullish for gold, offering some positive sentiment. However, recent ADP and initial jobless claims data have been negative for gold, so the non-farm data may outperform expectations but still be negative overall.
If the data exceeds or meets expectations, gold may initially dip then rise; if weaker than expected, it could rebound strongly. Conversely, if the data aligns with or is weaker than forecasts, expect continued volatility and potential declines.
In recent trends, U.S. economic data and prospects of rate cuts have dominated the market. After this week, the focus will shift back to geopolitical risks, maintaining a somewhat bullish trend.
Although the Middle East situation has entered its sixth day, with intensified military actions by Israel and the U.S. against Iran, market concerns about rising oil prices and inflation could weaken the Fed’s rate cut expectations. However, this is only a short-term pressure. Rising inflation will eventually boost gold’s commodity attributes and support prices. Additionally, signs of a widening U.S. fiscal deficit and macroeconomic uncertainties continue to underpin gold’s fundamentals. Therefore, even if new highs are not reached this year, gold is expected to remain volatile at high levels.

Technically, on the monthly chart, gold formed a top reversal pattern in February, and this month has shown a sideways doji top pattern, indicating a likely prolonged wide-range consolidation in the first half of the year. In the second half, there is potential for a rally to revisit highs around $6,000 or even $7,500. However, if prices break below $4,300 and close below that level in the first half, it could signal the end of the bull market, with further declines toward $3,500 or lower.
On the weekly chart, gold faced resistance and pulled back, forming a bearish engulfing pattern. Support levels to watch include the 10-week moving average or the middle band of the Bollinger Bands for potential bullish entries.
On the daily chart, gold repeatedly encountered resistance at the 5-10 day short-term moving averages, preventing further upward momentum. It is now retesting support at the middle band, indicating that bears still hold the advantage. Support can be found along the previous upward trend channel’s upper and lower trendlines for potential bullish entries.

Gold: Support levels around $5,050 or $5,000; resistance levels near $5,140 or $5,180.

Silver: Support levels around $80.30 or $78.70; resistance levels near $84.70 or $86.35.
Note:
Gold TD = (International gold price × exchange rate) / 31.1035
A $1 fluctuation in international gold prices roughly equals a $0.25 change in Gold TD (theoretical).
U.S. futures gold price = London spot price × (1 + gold swap rate × days to expiry / 365)
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The above opinions and analyses are solely the author’s personal views, for reference only, not trading advice. Trade at your own risk.
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