- 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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.