- Gold remains under pressure as a strong US dollar and hawkish Fed expectations weigh on prices.
- Central bank speeches and US payrolls data could determine gold’s near-term direction.
- Gold’s technical outlook stays bearish unless prices reclaim key resistance above $4,100.
prices traded in a subdued fashion as markets reopened, before easing lower. The reaction suggests investors have largely looked through the latest military exchanges involving the US and Iran.
The trend is clearly bearish. While the precious metal managed to post gains across the final two sessions of last week, it still finished lower overall, marking a fourth consecutive weekly decline. Attention now turns to a shortened trading week packed with important macroeconomic events. A series of speeches from leading central bankers and the latest US labour market data are likely to dictate sentiment.
US Dollar Resilience Continues to Weigh on Gold
Gold’s recent weakness has been driven by a combination of macroeconomic and market-specific factors. The biggest headwind remains expectations that the Federal Reserve will maintain a restrictive monetary policy stance, which has been underpinning the US dollar.
At the same time, demand for traditional safe-haven assets has faded as fears of a broader conflict in the Middle East have eased. Combined with the unwinding of speculative long positions accumulated earlier in the year, this has created a more challenging environment for bullion.
Looking further ahead, markets continue to debate the Fed’s next move. Should incoming economic data remain resilient and inflation prove sticky, policymakers could deliver some tightening. That scenario would likely strengthen the further and increase the pressure on non-yielding assets such as gold.
Central Bank Rhetoric and US Payrolls Take Centre Stage
This week’s economic calendar offers several potential catalysts. Investors will closely follow appearances by the heads of the Federal Reserve, European Central Bank and Bank of England during the ECB’s annual policy forum in Sintra.
Particular attention will be paid to any fresh comments from Fed Chair Kevin Warsh after his hawkish tone at the June policy meeting unsettled financial markets. Another firm message on inflation and interest rates would probably reinforce expectations for higher US yields, a combination that has historically weighed on gold prices.
Elsewhere, the focus will remain on US economic releases. With Independence Day approaching, Thursday will feature a heavy schedule of data, including the closely watched report, and wage growth figures.
Following several stronger-than-expected employment reports and a more hawkish Fed meeting, investors will be looking for confirmation that the US economy remains resilient. Another robust jobs report would strengthen the case for tightening policy later this year, while any signs of labour market weakness could weigh on those expectations.
Gold Technical Analysis: Path of Least Resistance Remains Tilted to the Downside
Gold staged a modest recovery at the end of last week, extending Thursday’s rebound and moving back above the psychological $4,000 mark. At the time of writing, prices were coming back down after testing the March low around $4,098, a level that previously provided support and has now acted as resistance following the recent breakdown.
The broader technical picture remains challenging for the bulls. XAU continues to trade comfortably below its 200-day moving average, while the declining 21-day exponential moving average also highlights the loss of upside momentum. Until these longer-term indicators are reclaimed, the prevailing trend continues to favour sellers.
On the downside, the first area to monitor remains the recent swing low at $3,916, where liquidity is likely to be concentrated. A decisive break beneath that level could expose the psychological support zones at $3,900 and $3,800, with relatively little technical support in between.
Conversely, if buyers manage to push prices convincingly above the $4,098-$4,136 resistance area, attention would turn towards the next resistance around $4,274-$4,300, coinciding with the larger bearish trend line.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.
