- Gold price challenges 21-Daily Moving Average at $1,967 again on Friday.
- Spike in United States Jobless Claims smashed the US Dollar and US Treasury bond yields.
- End-of-the-week flows and repositioning will likely drive Gold price action.
Gold price is consolidating Thursday’s impressive rebound from near $1,940, having yo-yoed within a $30 weekly range. Gold price could experience a breakout on Friday if the end-of-the-week flows trigger intense volatility as investors are likely to adjust their positions ahead of a blockbuster next week.
Federal Reserve pause bets rise after United States jobs data
Gold price staged a solid comeback on Thursday, gaining as much as $24, as bulls extended the early bounce amid the extended weakness in the US Dollar alongside US Treasury bond yields. The Bank of Canada’s (BoC) surprise rate hike drove renewed optimism of a US Federal Reserve (Fed) rate hike next week, but hopes faded after Initial Jobless Claims in the US jumped to the highest level since October 2021 at 261K. Weak US jobs data helped cement expectations that the Federal Reserve will pause its tightening cycle. The probability of a Fed rate hike pause in June stands at 75%, up from around 65% before the US data release.
Following the discouraging data, the US Dollar came under intense selling pressure along with US Treasury bond yields. The benchmark 10-year US Treasury bond yield corrected sharply from weekly highs near 3.81%, erasing almost half of Wednesday’s gains, to settle the day near 3.71%. These factors rekindled the demand for the non-yielding Gold price as bulls capitalized on heightened dovish Fed expectations.
On the final trading day of the week, Gold buyers are trading with caution in anticipation of a volatility surge. Investors could resort to repositioning heading into the weekly close and ahead of the top-tier United States Consumer Price Index (CPI) data and the Federal Reserve policy announcements next week. In the absence of any high-impact US economic data releases, the broader market sentiment will play a pivotal role in Gold price valuation as markets assess the softer-than-expected Chinese inflation data. Weakening price pressures in the world's biggest gold-consuming nation bode ill for optimists.
China’s Producer Price Index (PPI) for May fell for an eighth consecutive month, down 4.6% on an annual basis. Meanwhile, the country’s CPI rose 0.2% on year, less than the 0.3% increase expected.
Gold price technical analysis: Daily chart
Gold price continues to traverse in a defined range between the two key Daily Moving Averages (DMA), the 21 and the 100, at $1,967 and $1,941, respectively.
Last week’s 21 and 50 DMA Bear Cross remains in play and restrict Gold bulls. The 14-day Relative Strength Index (RSI) is sitting just beneath the 50 level, suggesting that Gold bears are likely to have the upper hand.
The RSI needs to recover above the midline to prompt a convincing break above the bearish 21 DMA at $1,967. Acceptance above the latter on a daily closing basis would initiate a meaningful recovery toward the flattish 50 DMA $1,990.
Further up, Gold optimists will aim to recapture the $2,000 psychological level.
On the flip side, Gold sellers need a daily closing below the 100 DMA support at $1,941 to resume the correction toward the previous week’s low at $1,932, below which the March 17 low of $1,918 will be tested.
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