Wednesday, June 7, 2023
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Gold Price Prediction: XAU/USD bulls repelled by USD bulls at key daily resistance

  • Gold bears enter at the crucial daily break.
  • This weekend’s focus will be on the US job market.

Gold prices returned to flat for the past day this week The rebound corrected to daily resistance near $1,730. Prices fell from a high of $1,725.60 to a low of $1,706.95 despite stronger U.S. yields and a stronger dollar, but remained above the previous day’s low.

Overall, gold has been stronger recently, returning to $1,700 this week, a rise from last week. As U.S. bond yields surged to multi-year highs, hitting monthly lows. Sentiment around the Fed has been the driving factor, albeit erratic. However, as data fades and flows in and out of inflation territory, gold can benefit from less hawkish speculation surrounding the Fed’s next move, with participants betting on a turning point earlier in the week. However, dovish hopes were dashed as OPEC+ announced deep production cuts to support oil prices, pushing up other Commodity prices such as lumber are higher:

Classic falling wedges and M-shapes are bullish for the lumber outlook. From sawmills to store shelves, wood can tell the market a lot about the state of the U.S. economy, and with the prospect of higher oil and lumber prices, inflation is expected to remain high. That in turn coincided with a chorus of hawkish speakers at the Fed this week.

Federal Reserve CEO Charles Evan The Reserve Bank of Chicago said in recent trading that inflation is very high right now, which is The Fed’s top concern. “The next Fed meeting will discuss whether to raise rates by 50 basis points or 75 basis points,” he said, adding that “policymakers want to raise rates by 125 basis points at the next two meetings.” Meanwhile, analysts at TD Securities believe that “in fact, the continued rise in inflation suggests the Fed is unlikely to preemptively stop raising rates.”

”Long-term restrictive rates suggest traders should ignore gold’s siren call as continued downtrend may prevail , while quantitative tightening continues to push real interest rates higher. ” ”However, at the same time, the margin of safety against trend signal changes has been weakened, which is additional purchases. While the queue has continued to add to their silver lengths in recent sessions, gold only needs to rise above $1755 an ounce to catalyze the trend following the buying program. ”

As for the price action on the day, the dollar is up so far despite the poor performance of initial jobless claims And continued the previous day’s gains. On Thursday, the dollar was back above 112.00, recovering from initial losses against most major currencies at the start of the week, before recovering lost ground:

As for the 10-year Treasury yield, it also moved higher, with more likely to come before the week ends:

Benchmark U.S. Treasury yields, whose recent gains pushed the dollar higher, rose to test previous resistance at 3.841%. Yields broke those highs on Thursday and printed 3.844% as the Wall Street cash market opened lower.

NFP in focus

At the end of the week, the focus will be on nonfarm payrolls. Analysts at TD Securities explained: “Employment growth likely continued to be strong in September, but at a slower pace than in recent months.” ”We also expect wage growth to slow to 0.3% m/m. Separately, regional surveys continued to point to a loss of momentum in manufacturing activity. While we expect the ISM to fall, we note that it has failed to match the previous weakness that other indicators have suggested. ”

Gold Technical Analysis

A recent break high of $1,735 opened the risk of a sharp bullish extension. However, this is a make-or-break moment and prices could easily pull back depending on Friday’s NFP and next week’s inflation figures.

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