Gold and silver hold 1-month low ahead of US non-farm payrolls

Gold and silver found some support on Friday (5 June) slightly off the one-month lows hit on the previous day as the market awaited crucial job market data from the US.

The metals had been on a weakening trend since the third week of last month tracking the firmness in the dollar and they continued downward this week as well despite the US currency paring most of its recent gains.

The yellow metal dropped to $1,172.10 on Thursday, its lowest since 1 May but has edged back to $1,178 as on Friday. Silver plunged to a fresh one-month low of $16.06 early Friday before rebounding to $16.21 as European markets opened.

The next important support for gold is $1,169, a break of which will open doors to $1,160, and then easily towards this year's low of $1,142.0. Then the big level to watch will be the 2014 low of $1,131, a break of which will take the metal to a multi-year low.

On the higher side, the yellow metal has its first important level at $1,187 and then $1,200. A break of that will strengthen the case for reversing the recent losses entirely and hitting a new multi-month high above the May peak of $1,232.41.

Silver

For silver, the immediate levels are $15.57 on the downside and $16.53 on the higher side, which is also endorsed by the 50-day moving average. Further, the March low of $15.26 and the May peak of $17.77 are to be watched.

The USD index had dropped to a three-week low of 94.66 on Thursday, moving further off the one-month high of 97.78 touched on 27 May, but it rebounded by the end of the day. On Friday, the index traded as high as 95.76.

Analysts have forecast that US employers may have added 225,000 jobs in May, more than 223,000 added in the previous month. Eurozone GDP data for the Q1 will also be revised on Friday and the numbers will be out a few hours before the key US data.

The weekly jobless figures released on Thursday were better than expected increasing the likelihood of a positive surprise in the NFP data as well.

In the week to 29 May, initial jobless claims came at 276,000, compared to 282,000 in the previous week and the market consensus of 279,000. Continuing claims of the previous week too dropped to 2.196 million from 2.226 million when analysts were expecting 2.208 million.