Gold clings to recovery gains above $1290
|- European stocks post heavy losses on Friday.
- US Dollar Index retreats from multi-month highs.
- Coming up: February NFP report from the U.S.
Following yesterday's drop to a 6-week low of $1280 on Thursday, the XAU/USD pair rebounded decisively on Friday and erased the majority of this week's losses. As of writing, the pair was trading at $1293, adding $7.5, or 0.6%, on a daily basis.
The ECB's downward revision to 2019 growth outlook and the cautious tone about the European economy slowing at a faster pace than initially anticipated reminded investors of global growth concerns and weighed on the market sentiment on Friday. Japan's Nikkei closed the day 2% lower and European equity indexes started the day under pressure. At the moment, the UK's FTSE is down nearly 1% and Germany's DAX is dropping 0.6%, helping the precious metal find demand as a safe-haven.
Meanwhile, with investors booking their profits ahead of the critical NFP data from the U.S., the US Dollar Index, which was last seen down 0.15% on the day at 96.45, erased a small portion of yesterday's 0.75% upsurge and is making it easy for the pair to preserve its bullish momentum on Friday.
“Wage growth for full-time workers finally picked up to 1.8% YoY in January after seven months of consistent declines. On Friday, we’ll be seeing if this upward trend is sustained, as this would further support our case that monetary tightening will resume later this year,” ING analysts argued previewing today's labour market report.
- US NFP Preview: 5 Major Banks expectations from February payrolls report.
Technical levels to consider
The initial resistance aligns at $1300 (psychological level) ahead of $1305.50 (50-DMA) and $1313 (20-DMA). On the downside, supports could be seen at $1285 (daily low), $1280 (Mar. 7 low) and $1276 (Jan. 24 low). With today's recovery, the CCI indicator on the daily chart rose toward the 0 level, suggesting that sellers have lost control over the pair's price action.
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