Gold under pressure

Gold dropped sharply this morning, giving back all of Friday’s gains and more. Despite this, gold remains comfortably above $2,300 per ounce. In addition, the MACD on the daily chart suggests that the downside momentum which started to accelerate in mid-April, has begun to flatten out. It’s worth noting that gold has given back a lot of its gains over the last three weeks, after surging above $2,400 to a fresh record high. It suddenly shot higher on Thursday afternoon following the release of US weekly Unemployment Claims. These came in way above expectations, hitting their highest level since back in November. This move came out of the blue, as jobless claims tend to go through long periods of relative stability. The news raised speculation that the US jobs sector was loosening up at last, which would lighten up an area of potential inflationary pressure. That in turn, raised the prospect of more than one 25 basis point rate cut this year.