• Gold closed the week in the red despite a late rebound on Friday.
  • The technical outlook shows that the bearish bias stays intact in the short term.
  • Next week's calendar will feature FOMC Minutes and US Nonfarm Payrolls data. 

Gold Price closed the first four days of the week in negative territory and touched its weakest level since late January below $1,790 on Friday before recovering above $1,800. Renewed dollar strength amid risk aversion weighed on XAUUSD and caused it to close the third straight week in negative territory. Ahead of next week’s highly-anticipated June jobs report from the US, gold is likely to find it difficult to stage a convincing rebound.

What happened last week?

Gold Price failed to gain support on Monday, despite the news that four members of the G7 decided to ban new imports of Russian gold. According to the World Gold Council, Russia is the second-largest gold producer in the world with 330.9 tonnes in 2021. Meanwhile, from a macro perspective, data from the US showed that Durable Goods Orders rose by 0.7% in May, compared to the market expectation for an increase of 0.1%. 

On Tuesday, gold fluctuated in a relatively tight range near $1,820 but ended up posting small daily losses. The Conference Board reported on Tuesday that the Consumer Confidence Index in the US fell to 98.7 in June from 103.2 in May. The publication further revealed that the one-year consumer inflation rate expectation climbed to 8% from May's revised print of 7.5%. With the US Dollar Index turning north after this report, gold continued to edge lower.

While speaking at the European Central Bank’s annual Forum on Central Banking on Wednesday,  FOMC Chairman Jerome Powell reiterated that the US economy could withstand the policy moves and noted that the dollar strength was "disinflationary at the margins." Wall Street’s main indexes suffered heavy losses on Powell’s hawkish remarks and the dollar continued to find demand as a safe haven.

On Thursday, the US Bureau of Economic Analysis announced that the Personal Consumption Expenditures (PCE) Price Index stayed unchanged at 6.3% on a yearly basis in May. The annual Core PCE Price Index, which the Fed uses as its preferred gauge of inflation, declined to 4.7% from 4.9% in the same period as expected. Despite the relatively soft PCE inflation report, month-end flows didn't allow gold to capitalize on falling US Treasury bond yields. 

On Friday, the dollar continued to outperform its rivals in the risk-averse market environment and the technical bearish pressure ramped up with gold falling below the key $1,800 level during the European session. The last data release of the week showed that the business activity in the US manufacturing sector expanded at a much softer pace in June than it did in May with the ISM Manufacturing PMI dropping to 53 from 56.1. The benchmark 10-year US T-bond yield lost more than 7% after the disappointing PMI survey and helped XAUUSD limit its losses. 

Next week

Caixin Services PMI data from China will be looked upon for fresh impetus on Tuesday. Earlier in the week, the upbeat Chinese Manufacturing PMI failed to help gold find demand. Hence, it is unlikely for this report to have a noticeable impact on gold’s valuation.

On Wednesday, the ISM Services PMI will be featured in the US economic docket. Later in the day, the FOMC will release the minutes of its June policy meeting. According to the CME Group FedWatch Tool, markets are currently pricing in a 66.5% probability of another 75 basis points (bps) Fed rate hike in July, compared to 84% a week ago. In case the FOMC’s publication boosts the odds of a 75  bps hike, gold could face additional bearish pressure. On the other hand, a dovish tone could weigh on the dollar and open the door for a rebound.

Finally, the US Bureau of Labor Statistics will release the Nonfarm Payrolls (NFP) data for June on Friday. The labor market is expected to show a loss of growth momentum in June with the NFP rising by 250,000 following May’s increase of 390,000. Investors will also pay close attention to wage inflation data. On a yearly basis, Average Hourly Earnings are expected to rise by 5.2%, same as in May. Unless there is a negative surprise in the NFP print, a higher-than-forecast wage inflation growth could boost the greenback and vice versa.

It's worth noting that gold's inverse correlation with the 10-year US T-bond yield continued to weaken this week. Markets may be reassessing the inflation outlook and turning more optimistic about inflation having peaked already. This could explain how gold, as a traditional inflation-hedge, and US yields fell in tandem this week. Hence, any comments or market developments that point to easing price pressures could trigger a similar market reaction.    

Gold technical outlook

The Relative Strength Index (RSI) indicator on the daily chart stays near 40, suggesting that gold remains bearish and has more room on the downside before turning technically oversold. Sellers, however, might stay on the sidelines until XAUUSD makes a daily close below $1,800 (psychological level). In that scenario, $1,780 (static level) aligns as the next bearish target ahead of $1,767 (static level).

On the upside, $1,810 (static level, former support) aligns as first technical hurdle before $1,832 (20-day SMA). The descending trend line coming from early March stays intact and forms stiff resistance at $1,840, where the 200-day SMA is located. 

Gold sentiment poll

The majority of experts polled by FXStreet expect gold to go into a consolidation phase next week. The one-month outlook paints a mixed picture with the average target sitting at $1,790.

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.

Feed news Join Telegram

Recommended Content

Recommended Content

Editors’ Picks

EUR/USD rises above 0.9700 amid persistent dollar weakness

EUR/USD rises above 0.9700 amid persistent dollar weakness

EUR/USD has gathered bullish momentum and advanced to a fresh daily high above 0.9700 in the American session on Wednesday. The renewed selling pressure surrounding the greenback amid improving market mood seems to be fueling the pair's rebound.


GBP/USD extends recovery beyond 1.0850 in volatile session

GBP/USD extends recovery beyond 1.0850 in volatile session

Following an initial spike to 1.0850 on BoE's intervention in gilt markets, GBP/USD lost nearly 300 pips. With the dollar losing its strength after Wall Street's opening bell, however, the pair reaches fresh daily highs above the level. 


Gold: Sharp bounce falling short of indicating a trend change

Gold: Sharp bounce falling short of indicating a trend change

XAUUSD bounced from a fresh two-year low of $1,614.81 a troy ounce as dip buyers appeared on the dollar’s extreme overbought conditions. The bright metal peaked at $1,661.57, its highest for the week, holding above the $1,650 mid-US afternoon.

Gold News

Cardano price ignored the Vasil hard fork, but here is a promising bullish pattern

Cardano price ignored the Vasil hard fork, but here is a promising bullish pattern

ADA has a lot to prove to investors amid questions over frequent declines despite increased development activities. The smart contracts token is trading slightly below its price level before the Vasil hard fork.

Read more

Invesco Nasdaq Trust (QQQ) ETF hopes for pivot but faces Apple headwinds

Invesco Nasdaq Trust (QQQ) ETF hopes for pivot but faces Apple headwinds

Stocks remain challenged this morning by competing news as overall volatility levels remain close to recent highs. A brief attempt at a rally on Tuesday failed miserably, and now the market opens negatively after having attempted to move higher during the premarket.

Read more