Gold Price Outlook Mired by Failed Run at 200-Day SMA

GOLD TALKING POINTS

Gold prices are under pressure following the upbeat figures surrounding the U.S. Non-Farm Payrolls (NFP) report, and recent price action raises the risk for a further decline in the precious metal as the rebound from the 2018-low ($1282) unravels.

GOLD PRICE OUTLOOK MIRED BY FAILED RUN AT 200-DAY SMA

The 233K print for NFP along with the unexpected pickup in U.S. Average Hourly Earnings pushed bullion to a fresh weekly-low ($1289), and gold prices may exhibit a more bearish behavior over the coming days as the fresh developments coming out of the world’s largest economy puts pressure on the Federal Open Market Committee (FOMC) to adopt a more aggressive approach in normalizing monetary policy.

Even though Fed Fund Futures continue to reflect limited expectations for four rate-hikes in 2018, U.S. Treasury Yields have also recovered coming into June especially as Chairman Jerome Powell and Co. are widely expected to deliver a 25bp rate-hike later this month. Keep in mind, the updated projections from Fed officials may largely influence the outlook for gold prices as the committee pledges to phase out the forward-guidance for monetary policy, and hints of an extended hiking-cycle may push bullion back towards the December-low ($1236) as market participants prepare for higher interest rates.

GOLD DAILY CHART

• Near-term outlook for XAU/USD remains mired by the string of failed attempts to push back above the 200-Day ($1307) simple-moving average (SMA), with gold prices at risk of threatening the recent range as the Relative Strength Index (RSI) continues to track the bearish formation from earlier this year.
• Still need a break/close below the $1288 (23.6% expansion) to $1291 (50% expansion) region to look for a move towards $1271 (38.2% expansion) to $1279 (38.2% retracement), with the next area of interest coming in around $1260 (23.6% expansion).

For more in-depth analysis, check out the Q2 Forecast for Gold

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--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.