- The yellow metal would finish the week on the defensive, losing 0.28%.
- Sentiment remains negative, as US equities fall between 1.02% and 2.57%.
- Fed’s Mester supports 50 bps hikes in June and July; September is still open for 50 or 25 bps increases.
- Gold Price Forecast (XAU/USD): Failure at $1889.91, exacerbates a fall towards $1800.
Gold spot (XAU/USD) slumps from three-week highs near $1874 towards the confluence of the 20 and the 200-day moving averages (DMAs) around the $1840s region after the US Labor Department revealed that the US economy added more jobs than expected. At the time of writing, XAU/USD is trading at $1848.43, falling 1.06%.
Fed speakers to keep Gold prices on the defensive
In the meantime, Cleveland’s Fed Loretta Mester (2022 voter) is crossing the wires. She said that the one problem that the Fed has is inflation, and contrarily to what JP Morgan’s CEO Jamie Dimon said about a hurricane ahead in a Bloomberg article, Mester does not see it. Nevertheless, added that risks of recession have gone up.
Loretta Mester added that she supports 50 bps increases in June and July while not ruling it out in the September meeting, but it would be data-dependent. She said that if she sees compelling evidence of lower inflation, then a 25 bps hike in September would be appropriate.
Earlier, the US Nonfarm Payrolls for May, illustrated that the economy added 390K new jobs, far more than the 318K foreseen. Nevertheless, financial analysts’ chatter about the US labor market still supports the view that the US Federal Reserve will tighten aggressively after receiving the green light.
Analysts at Commerzbank, in a note, wrote that “The labor market thus continues to be very robust. Due to the unchanged high demand for labor, there is still a risk of a wage-price spiral. Further sharp Fed rate hikes are likely.” They stated that they “maintain our forecast that the Fed will raise its key rate to 3.00% by the end of the year, i.e., by another 200 bps.”
In the US jobs report, Average Hourly Earnings on its YoY reading remained unchanged at 5.2%, reflecting the tight labor market though easing a little bit, worries of a wage-price spiral.
In the meantime, the US Dollar Index, a gauge of the greenback’s value vs. a basket of peers, is rising 0.42%, sitting at 102.187, a headwind for Gold prices. That, alongside the US 10-year Treasury yield aiming towards the 3% threshold, currently at 2.96%, will keep the non-yielding metal on the defensive.
In the week ahead, the US Federal Reserve board members begin their blackout period on preparations for the June meeting. However, the US economic docket would keep investors’ eyes on the May inflation report alongside the UoM June’s Consumer Sentiment.
Gold Price Forecast (XAU/USD): Technical outlook
XAU/USD remains under pressure after failing to break above March 29 swing low-turned-resistance at $1889.91. Hence, XAU/USD sellers entered the market and sent Gold prices sliding near the intersection of the 20 and 200-DMA near the $1841.65-$1842.51 area. Further exacerbating the pullback is the Relative Strength Index (RSI) in negative territory and aiming lower.
Therefore, XAU/USD’s first support would be the $1841-$1842 area. Break below would expose the June 1 cycle low at $1828.33, followed by the Bollinger band bottom line at $1809.93.
|Today last price||1848.43|
|Today Daily Change||-20.60|
|Today Daily Change %||-1.10|
|Today daily open||1868.63|
|Previous Daily High||1870.54|
|Previous Daily Low||1844.16|
|Previous Weekly High||1869.75|
|Previous Weekly Low||1840.85|
|Previous Monthly High||1909.83|
|Previous Monthly Low||1786.94|
|Daily Fibonacci 38.2%||1860.46|
|Daily Fibonacci 61.8%||1854.24|
|Daily Pivot Point S1||1851.68|
|Daily Pivot Point S2||1834.73|
|Daily Pivot Point S3||1825.3|
|Daily Pivot Point R1||1878.06|
|Daily Pivot Point R2||1887.49|
|Daily Pivot Point R3||1904.44|
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.