According to market analyst Ross J Burland, the gold move is blocking the bearish test at the daily counter trendline. Meanwhile, with all eyes on the Fed this week, the US dollar is giving back a significant portion of its recent rally. The analyst thinks that a drop in the gold price below $1,780 is an ominous sign ahead of the Fed.
“The latest pressure on gold may soon subside”
cryptocoin.com As we reported, gold price sits at $1,792.57, down 0.05% on the day after a strong climb to daily resistance at $1,796.13 at daily highs. Meanwhile, the US dollar fell against its main rivals on Monday and corrected a significant portion of the largest daily gain in more than four months from the previous session. Hedge funds are curbing the bearish bias ahead of the much-anticipated US Federal Reserve policy meeting this week, when the Fed is expected to unveil large-scale tapering plans, according to the analyst. Societe Generale analysts make the following assessment:
Financial markets are pricing aggressively for increases in 2022. But the Fed is unlikely to approve or withdraw these expectations at this point. Because we expect more evidence of inflation.
Also in focus are US Employment trends and they are expected to gain momentum. Analysts at the Societe general expect 520,000 job gains for Nonfarm Employment this weekend.
Traders in global markets have aggressively raised their outlook for policy tightening with the Fed, as an energy crisis and congested supply chains push inflation up and cause market participants to price the risk of a faster exit. Analysts at TD Securities note that the U.S. Treasury is pricing in the probability of a 90% increase in June, although the first hike by July 2022 and tapering is on track to end only by June. Analysts’ assessment is as follows:
We reiterate that pricing for Fed hikes is too hawkish. But this week’s nonfarm payrolls could steal the show as the outlook for real hikes becomes more and more dependent on the Fed’s employment issue. However, the final push for gold may soon subside as an ongoing CTA selloff program comes to an end.
Technical analysis: Gold price is currently at a crossroads
Market analyst Ross J Burland says Monday’s moves have undermined the opening bear trend seen earlier in the week to the upside as the chart shows.
The analyst states that when the gold price moves towards the daily resistance, as shown in the chart, bearish expectations are dispelled by the conservative supply.
According to the analyst, the gold price is currently at a crossroads and as a result, the M-formation neckline break will leave the uptrend in the coming days, while the rejection of the opposite trendline will put the bears back in control at a turning point.
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