Gold consolidates as weaker-than-expected US jobs report reduces rate hike risk

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Gold drops 0.73% to $4,145 today

Highlights

Gold remains near a two-week high after soft U.S. jobs data lowered expectations for further Fed rate hikes.
Rising dollar strength capped earlier gains as investors await upcoming Fed meeting minutes for monetary policy signals.
Technicals indicate a 60% probability of gold trading higher in the $4,032 to $4,258 range, with mixed momentum signals suggesting consolidation.

Fed rate outlook shifts as jobs report spurs gold demand reversal

Gold held near a two-week high following a weaker-than-expected U.S. jobs report last week, which lowered market expectations for further Federal Reserve interest rate hikes, according to CNBC. This shift in rate hike projections boosted demand for non-yielding assets such as gold. However, according to Investing.com, early gains reversed as the U.S. dollar recovered from the prior week's losses, limiting upward momentum in the bullion market. Market participants are also awaiting the upcoming release of the Federal Reserve's June 16-17 meeting minutes for additional guidance on future monetary policy.

Momentum mixed as conflicting indicators test key support

On the technical front, XAU/USD is trading below the 20-period moving average but above the 50-period moving average on the H4 timeframe, while remaining firmly beneath the 200-period moving average on the daily chart. The Ichimoku Kijun level at $4,129 acts as immediate support for the price. The Moving Average Convergence Divergence (MACD) signals strong upside momentum, and the Average Directional Index (ADX) indicates buyers have the advantage. The Relative Strength Index (RSI) points to a buy territory, but the Stochastic RSI reflects oversold conditions and the Commodity Channel Index (CCI) signals selling, resulting in mixed short-term indications. Bull/Bear Power suggests overbought conditions and the Awesome Oscillator remains neutral.

Range-bound outlook as breakout risk tempers consolidation bias

In the short term, XAU/USD is expected to trade within a range of $4,032 to $4,258. The probability of an upward move is estimated at 60%, while the likelihood of a downtrend is 40%. The baseline scenario calls for the asset to consolidate sideways within the defined range. Should bullish momentum build and resistance break, price could approach the upper end of this band. Conversely, a drop below immediate support would expose the lower end of the volatility range.

Viktoras Karapetjanc, Traders Union expert, notes that gold is consolidating near recent highs after weaker U.S. jobs data shifted the macro backdrop in its favor. He sees lower rate hike expectations and firm technicals as supportive drivers. However, Karapetjanc remains mindful of mixed short-term signals and the U.S. dollar’s resilience. He expects gold to trade in a sideways range unless a strong move develops. "Underlying macro trends are constructive and I believe any positive momentum could quickly drive gold towards the $4,258 level."

Earlier, analysts noted that gold was exhibiting subdued momentum and faced mixed technical signals amid evolving institutional interest. With recent shifts in Federal Reserve expectations and ongoing technical consolidation, traders should monitor for a potential breakout from the current range, as the balance of probabilities now leans modestly toward further upside.

Source of Data: XAU Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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