Gold Prices Fall as Traders Raise Odds of More Fed Tightening after Solid Jobs Data

By Investor Empires On Apr 10, 2023

Outlook for gold prices:

gold prices Sink as Traders’ Odds Increase for the Month of May Federal Open Market Committee interest raise rate Following the strong US labor market data last Friday
U.S. dollar Strength in the forex space is also undermining precious metals
Despite Monday’s decline, XAU/American dollar It maintains a bullish profile over the medium term

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Most read: The US dollar is rising as stakes rise in May, but the price outlook may hinge on inflation data

Gold prices (XAU/USD) retreated on Monday, falling more than 1.0% and threatening to break below the psychological $2000 level, undermining broadly US dollar strength and raising prospects for additional Fed tightening after the recent strong US labor market data. Friday.

The latest US employment report, which showed that the US economy added 236,000 jobs in March, led traders to increase bets that the Federal Open Market Committee (FOMC) will deliver another quarter-point rate hike at its meeting in May, implicitly reducing Possibility of pausing the next hiking cycle. Month.

The continuation of the central bank’s tightening campaign will benefit the US currency, creating headwinds for the dollar-denominated yellow metal and preventing its prices from trading decisively above the $2,000 threshold in the coming days and weeks. However, this does not mean that the Ascension status has been revoked.

Related: Is it time for silver to shine a little brighter?

Despite the uncertainty about the near-term trajectory of monetary policy, the Fed is likely to adopt a dovish stance at some point in the not-too-distant future once the economy takes a turn for the worse, weighed down by the late effects of aggressive hikes and the negative impact of banking sector turmoil. When this happens, gold will be in a good position to make a strong rally.

Focusing on price action analysis, XAU/USD is currently hovering above a key technical support at $2,000 after the recent decline. If this floor is convincingly removed, the sellers can attack $1,975, followed by $1,940.

On the flip side, if the bulls regain control of the market and spark a recovery from current levels in short order, the first resistance to watch is at $2050 near the April swing high. If prices can breach this ceiling, then the buying interest could gain momentum, paving the way for a rally towards $2075, which is the all-time high for gold.

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