US jobs data pointed to a tight labor market and boosted expectations for another rate hike by the Federal Reserve in May. After that, the price of gold fell by as much as 1% on Monday to below $2,000.
The bullish outlook for gold price has a chance to continue
Hareesh V, head of commodity research at Geojit Financial Services, points to the technical correction in prices. In this context, the analyst says, “Gold fell due to Fed rate hike expectations, strong US jobs growth report on Friday and stable dollar.”
Meanwhile, the Dollar index (DXY) rose 0.1%, making bullion expensive for offshore buyers. Nonfarm payrolls increased by 236,000 in March, against expectations of 239,000, according to data released by the US Department of Labor on Friday. The data also showed that the unemployment rate fell to 3.5% from 3.6% the previous month. The report raised bets that the Fed will raise rates next month, with markets pricing a 63.4% chance for a 25bps increase, according to the CME FedWatch tool. The analyst makes the following comment in the light of the data:
However, the short-term outlook remains bullish for gold. The bullish outlook has a chance to continue as long as the gold price stays above $1,920.
The bull trend for yellow metal is still intact, but…
Gold has traditionally been viewed as a hedge against inflation, but higher interest rates increase the opportunity cost of holding a non-yielding asset. Metal firm MKS PAMP underlines the following in a note:
The bull trend formed since November 2022 is still intact. A “stickier” core US CPI on Wednesday will solidify a 25bps increase. Therefore, gold price will not hit all-time highs this month unless there is a new catalyst.
Gold investors need to pay attention to these
Meanwhile, China-related risk aversion is joining the US Dollar’s recovery to put downward pressure on the gold price. However, the recent inactivity of the market is limiting the recent movements of gold. Recently, South Korea joined the United States to defend Taiwan with Beijing’s show of intense military exercises. Despite this, the conditions of tension are still unexplained, as the US precautionary signaled its latest moves to send arms to Taipei and resisted taking major steps.
On the other hand, cryptocoin.comAs you follow, the better-than-expected US Non-Farm Payrolls (NFP) data on Friday renewed the hawkish Fed bets. He also pointed out that the Fed will raise interest rates by 0.25% despite the previously expected inaction. However, falling US Treasury bond yields and generally weak US statistics support the US dollar bulls. Market analyst Anil Panchal comments:
It should be noted that gold buyers remain hopeful ahead of the US Consumer Price Index (CPI) data and the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting Minutes. While gold investors should keep an eye on geopolitical headlines for intraday directions, US inflation and Fed Minutes will be crucial for clear guidance later on.
Gold price technical analysis: Further declines expected
Market analyst Anil Panchal points out the following levels for the technical outlook for gold. Gold price trimmed its intraday losses by around $1,995 amid the Easter Monday break on major exchanges. In doing so, the bullion bounced off the 200-bar Exponential Moving Average (EMA) but remained a light bid in one day. This angered sellers after the bullion posted its first weekly gain in the past three weeks.
Gold remains under pressure as it broke the one-week ascending support line and now resistance alongside the 50-bar Exponential Moving Average (EMA) surrounding $2,007 to lure sellers. Still, the 200-EMA and the resistance line before March 20, around $1,990, and $1,982, respectively, could push gold price down before meeting the bears.
In this case, an ascending support line from March 22 near $1,958 would be on the gold seller’s radar. Meanwhile, recovery moves remain elusive unless we break past the $2,007 50-EMA hurdle. Following that, the recent high near $2,035 and the support line from before April 3, now resistance near $2,040, could test gold buyers. If the precious metal breaks past $2,040, the previous annual peak surrounding $2,070 and the all-time high marked around $2,075 in 2020 will be in focus.
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