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

Zhang Yaoxi: Geopolitical tensions rise again with non-farm data, gold prices fluctuate or rebound and strengthen
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 lows and around the 60-day moving average for potential long positions.
Specifically, gold opened at $5145.86 per ounce in the Asian session, initially rebounded, reaching an intraday high of $5194.34 at 11 a.m., then faced resistance and declined. During the European session, it moved sideways, and in the US 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.
In terms of influences, intraday support buying and the escalation of Middle East conflicts increased safe-haven demand, pushing gold to an intraday high. However, resistance and a strengthening dollar, along with US February Challenger layoffs (in thousands) and initial jobless claims for the week ending February 28 (in thousands), were negative for gold, cooling expectations of Fed rate cuts and causing the price to retreat and close lower.

Outlook for today, Friday (March 6): International gold continued its overnight rebound at the open, strengthening initially. The US dollar index was somewhat weak early, providing some support. Additionally, tonight’s US non-farm payroll data is generally bullish for gold, offering some positive sentiment. However, recent ADP and initial jobless claims data were negative for gold, so the non-farm data may outperform expectations but could still be negative overall.
If the data exceeds or meets expectations, gold may initially dip then rise; if weaker than expected, it may rebound strongly. Otherwise, expect sideways movement.
Currently, the trend is dominated by US economic data and prospects of rate cuts. After this week, the market will again focus on geopolitical risks, maintaining a somewhat bullish bias.
Although the Middle East situation has entered its sixth day, with intensified military actions by Israel and the US against Iran, concerns about rising oil prices and inflation have increased, weakening expectations of Fed rate cuts. However, this is only a short-term suppression. Rising inflation will eventually boost gold’s commodity attributes and strengthen prices. Additionally, signs of a significant US fiscal deficit increase and macro uncertainties support gold’s fundamentals. Therefore, even if new highs are not reached this year, high-level volatility is expected to persist.

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 would signal the end of the bull market, with further declines toward $3,500 or lower.
On the weekly chart, gold faced resistance and retreated this week, forming a bearish engulfing pattern. Support levels to watch are the 10-week moving average or the middle band of the Bollinger Bands for potential bullish opportunities.
On the daily chart, gold repeatedly encountered resistance at the 5-10 day short-term moving averages, preventing further bullish 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 trend lines 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 causes a $0.25 change in Gold TD (theoretically).
US futures gold price = London spot price × (1 + gold swap rate × days to expiry / 365)
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