- The price of gold continues its struggle to post a significant recovery from the yearly low.
- Expectations of an aggressive Fed rate hike are keeping the dollar near its 20-year high and capping gold’s gains.
- Recession fears benefit XAU/USD as attention turns to NFP.
The price of Prayed extends its consolidation move on Friday and remains trapped in a range below the $1,750 level during the European session.
Investors seem convinced that the Federal Reserve will maintain a faster monetary policy tightening path to combat stubbornly high inflation. These expectations were confirmed by the minutes of the FOMC meeting on June 14 and 15. In fact, those responsible for monetary policy insisted on the need to fight inflation, even if this translates into an economic slowdown, and indicated that another rate hike of 50 or 75 basis points is likely at the July meeting. This, in turn, was seen as a key factor that continued to act as a headwind for non-yielding gold.
The prospects of more aggressive increases in interest rates by the Fed kept the US dollar near its two-decade high and further weighed on the price of gold, denominated in dollars. However, the downtrend was supported by growing fears of a recession, dampening optimism in US equity markets and providing some support for the safe-haven XAU/USD. Investors were also reluctant to open aggressive positions, preferring to wait on the sidelines ahead of Friday’s release of US jobs data.
The NFP report is expected to show that the US economy added 268,000 jobs in June, down from 390,000 the previous month. However, the unemployment rate is expected to remain at 3.6% during the reported month. The data will weigh on short-term dollar price dynamics, which, coupled with broader risk sentiment, should give gold prices some lift. However, the lack of significant buying interest suggests that the short-term downtrend may be far from over.
Therefore, any recovery attempt could be seen as an opportunity for the bears and risks fading quickly. Nonetheless, XAU/USD remains on track to finish in the negative for the fourth week in a row, just above its lowest level since September 2021, around the $1,732 region touched on Wednesday.
gold technical levels
Source: Fx Street
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