A bearish Head and Shoulders pattern has formed on the daily gold chart. Price is now nearing the neckline. The pattern is usually traded by entering short once price has broken below the neckline.
The yellow metal was placed under pressure after yesterday’s major rally in U.S. equities, with the Dow surging 329 points.
Both U.S. and Chinese stocks have been boosted by recent positive economic reports. The Caixin China manufacturing purchasing managers index increased to 50.8 in March from 49.9 in February.
Upbeat data and optimism over China-U.S. trade has alleviated fears over global economic growth and weighed on safe haven assets such as gold.
Traders will be looking for cues from this Friday’s U.S. employment report. Analysts expect a more robust Non-farm Payrolls print of 170K, following the weak 20K figure seen in February.