On Friday, gold broke off a series of five positive days in a row and showed a rather strong correctional pullback, amid the publication of a good report from the US Department of Labor. According to the data presented in December, the maximum number of new jobs in the USA was created in the last 10 months, and the average wage level, despite the expectations of many analysts, increased both on an annualized basis and relative to the previous month. Published data somewhat weakened investor concerns on US economy slowdown, sharply bringing back the demand for risky assets. All major US indices showed growth of more than 3% on Friday, thus putting pressure on the yellow metal, which many investors had previously bought to protect against increased geopolitical and economic risks. However the previous week was closed in the positive way and the correction might trigger more longs inflow as technical conditions has improved for more long correction.
Today, gold is quite actively gaining, recovering most of Friday losses. In the first half of the trading day, there will be no much economic news on the market, so investors will mainly play back data published by the Ministry of Labor on Friday. Among the events that are worth paying attention we can note the report on retail sales for the EU as a whole, and for individual countries of the Union in particular. In the US, the market attention will be directed to the publication of the PMI services sector. Experts expect a decline from 60.7 to 59.6 points.
On Tuesday, there will not be much economic news, investors will focus on data on industrial production in Germany, as well as data on the trade balance in the United States.
The main drivers for the market this week will be news from the US Federal Reserve. The monetary policy of the Fed remains the main factor influencing both the US dollar and the gold.
On Wednesday, the market will focus upon the last FOMC meeting data, where a decision was made on the last rate hike in 2018 and the forecast was lowered from three to two according to the number of possible rate increases in 2019. The content of this document may have a significant impact on the market, since traders will be able to assess the attitude of individual FOMC members to the policies pursued by the Fed. The very next day, on Thursday, Fed Chairman Jerome Powell will speak at a meeting of the economic club in Washington.
In addition to the speech of Powell, on January 10, the minutes of the last ECB meeting, as well as data on housing sales in the US, will be in the center of investors' attention.
On Friday, we will focus on the data on inflation in the United States.
On the chart, despite a local correction on Friday, gold manages to maintain the structure of the medium-term uptrend, which gives serious reasons to believe that the current movement in the market can continue. Having found support at the level of 1278.00, the buyers managed to restore the price to the current value of 1290.00 and in the future we can expect this trend to continue to retest a very strong resistance level in the range between 1300.00-1310.00.