- Gold remains on the defensive during the European session on Friday amid aggressive expectations from the Fed.
- The underlying bullish sentiment around the USD weighs on the precious metal.
- A softer risk tone offers some support as investors await the release of the US NFP jobs report.
The Prayed reversed modest intraday losses and is now trading around the region of 1,974-1,975$virtually unchanged on the day at the start of the European session on Friday.
Previous day’s sell-off on Wall Street weighed on sentiment of investors, which was evident by a softer tone around the equity markets. This, in turn, was seen as a key factor that offered some support to safe haven goldthough any significant hike remains elusive amid prospects for further Fed policy tightening.
Fed Chairman Jerome Powell said Wednesday that a 75 basis point rate hike is not under active consideration, though he said policymakers are ready to approve an increase of 50 basis points in the next meetings. Additionally, markets continue to price in some 200 basis points of rate hikes in the remainder of 2022, which continued to support elevated US Treasury yields.
Apart of this, the underlying bullish sentiment around the US dollarwhich remained stable near its highest level in two decades, acted as a headwind for the price of gold, denominated in the dollar. However, the decline seems supported as investors prefer to wait on the sidelines before the release of monthly US employment data.
The NFP report is expected to be consistent with tighter labor market conditions and is likely to support the case for further Fed rate hikes. This, coupled with the appearance of fresh selling on Thursday, suggests that the path of least resistance for gold is down and any recovery attempt could be seen as a selling opportunity.
gold technical levels
Source: Fx Street
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