The gold price is holding Thursday’s strong recovery from near $1,940, after yo-yoing inside a $30 weekly range. If end-of-week flows cause high volatility, gold might experience a range breakout on Friday. As investors are expected to rebalance their holdings ahead of a blockbuster next week.
Federal Reserve pause bets grow on US job statistics.
The gold market produced a strong return on Thursday, gaining as much as $24. As bulls prolonged the early bounce with the US Dollar’s protracted slump alongside the US Treasury. The Bank of Canada’s (BoC) surprise rate boost fueled renewed confidence for a US Federal Reserve (Fed) rate move next week. But that optimism dissipated after the US Initial Jobless Claims surged to the highest level since October 2021. At 261K last week. Weak US employment numbers contributed to anticipation. That the Federal Reserve may suspend its tightening cycle. The probability of a Fed rate hike halt in June has risen to 75%, from roughly 65% prior to the US data announcement.
Following the disappointing statistics, the US Dollar. As well as US Treasury bond yields, came under heavy selling pressure. The benchmark 10-year US Treasury note yields fell rapidly from weekly highs near 3.81%. wiping out over half of Wednesday’s gains to close the day near 3.80%. These considerations revived demand for the non-yielding Gold price. As bulls went all out to capitalize on the Fed’s increased dovishness.
On the final trading day of the week, gold buyers are trading cautiously, anticipating a surge in volatility as investors reposition ahead of the weekly close and the top-tier United States Consumer Price Index (CPI) data and Federal Reserve policy announcements due next week. In the absence of any significant US economic data releases, global market mood will be critical in determining gold price values, as markets examine softer-than-expected Chinese inflation statistics. Weakening price pressures in the world’s largest gold consumer are bad news for gold bulls.
China’s Producer Cost PPI inflation declined for the ninth consecutive month in May, falling 4.6% year on year. Meanwhile, the country’s CPI grew 0.2% in the reported month, compared to predictions of a 0.3% gain.
Technical analysis
The gold price remains in a defined range between the two important Daily Moving Averages (DMA), the 21 and the 100, which are now at $1,967 and $1,941 respectively.
Last week’s 21 and 50 DMA Bear Cross is still in play, limiting Gold bulls, while the 14-day Relative Strength Index (RSI) is barely below 50, indicating that Gold bears are likely to have the upper hand.
The RSI must rise above the midpoint to signal a convincing break above the negative trend line. 21 DMA at $1,967. Acceptance over the latter on a daily closing basis will start a significant recovery towards the flattish 50 DMA of $1,990.
Gold bulls will seek to reclaim the psychological level of $2,000 in the next months.
Gold sellers, on the other hand, require a daily close below the 100 DMA support at $1,941 to resume the decline towards the previous week’s low at $1,932, below which the March 17 low of $1,918 will be tested.
