Gold Prices Dip on Heightened US Interest Rate Expectations

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Gold (XAU/USD) experienced a slight decline of 0.25% on Tuesday, falling below the key resistance level of $2,315. The precious metal is feeling the pressure of rising US interest rate expectations, fueled by the robust US jobs data released on Friday, suggesting persistent inflationary pressures.

Strong US Employment Data Alters Interest Rate Outlook

The strong wage and employment figures from the US Nonfarm Payrolls (NFP) report have led to a reassessment of the Fed’s interest rate path. Market expectations for a September rate cut have diminished, with the probability now hovering around 54%, down from 67% before the NFP release.

However, the global interest rate outlook remains more subdued, providing some support for gold. Recent rate cuts by the Bank of Canada and the European Central Bank, along with speculation of a potential Swiss National Bank rate cut, could offer a degree of buoyancy to gold prices.

Investors are now eagerly awaiting the Federal Reserve’s June meeting conclusion on Wednesday and the release of May’s US Consumer Price Index (CPI) data on the same day, both of which could significantly impact gold’s future trajectory.

Technical Analysis: Gold Retraces and Resumes Downward Trend

Gold’s recent pullback has seen it retest the $2,315 support-turned-resistance level, before resuming its downward movement. The short-term trend remains bearish, with the next potential target at $2,285. A stronger move down could push gold towards the $2,279 support level.

However, a decisive break above $2,315 could signal a weakening of the short-term downtrend and potential for further upside. Despite the current weakness, gold’s medium and long-term trends remain bullish, leaving the door open for a potential recovery.


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