{"id":85584,"date":"2024-06-11T15:33:44","date_gmt":"2024-06-11T12:33:44","guid":{"rendered":"https:\/\/ironfx-com-php8.wp-dev.int.theitops.net\/?p=85584"},"modified":"2024-06-11T15:33:45","modified_gmt":"2024-06-11T12:33:45","slug":"gold-outlook-golds-steep-decline","status":"publish","type":"post","link":"https:\/\/www.smartindonesiafx.id\/fa\/gold-outlook-golds-steep-decline\/","title":{"rendered":"Gold Outlook: Gold\u2019s steep decline"},"content":{"rendered":"

Gold\u2019s price moved in a downwards fashion over the past week<\/a>. Today we are to discuss the fundamental challenges laid ahead for the precious metal as well as upcoming financial releases that may affect the direction of its price action. Finally, we will be concluding this report with a technical analysis of gold\u2019s daily chart.<\/p>\n\n\n\n

FOMC Interest rate decision<\/strong><\/strong><\/strong><\/h2>\n\n\n\n

The Fed\u2019s interest rate decision<\/strong> is set to occur during tomorrow\u2019s American session. The current expectations by market participants are for the bank to remain on hold, with Fed Fund Futures currently implying a 99% probability<\/strong> for such a scenario to occur. Therefore, our attention now turns to the bank\u2019s .<\/strong>, in addition to the post-decision press conference<\/strong> by Fed Chair Powell.<\/p>\n\n\n\n

In the event that Fed policymakers appear to be predominantly hawkish<\/strong> in nature, i.e implying that interest rates may need to remain higher for longer, and thus pushing back against the market\u2019s current expectations of a rate cut in the bank\u2019s November meeting, it could provide support for the greenback whilst weighing on the precious metal\u2019s price and vice versa.<\/p>\n\n\n\n

On another note, the Fed\u2019s revised dot plot<\/strong> is set to be released alongside the Fed\u2019s interest rate decision. The dot plot<\/strong> is essentially the forecasts made by Fed policymakers for where they believe interest rates will be further down the line. Therefore, should the dot plot be revised higher i.e implying interest rates remaining higher for longer and thus fewer expected rate cuts in the near future, it could support the dollar whilst weighing on the precious metal\u2019s price<\/strong> and vice versa.<\/p>\n\n\n\n

US Financial releases<\/strong><\/strong><\/h2>\n\n\n\n

The release of the US Employment data<\/strong> for May tended to highlight the resilience of the US labour market. It was characteristic that the NFP<\/strong> figure vastly exceeded expectations by coming in at 272k versus the expected figure of 182k, implying a resilient labour market. Hence following the release, we saw the USD getting support, whilst gold\u2019s price moved lower. As a reminder, the implication of a tight US employment market could allow the Fed to maintain rates high for longer, which in turn may weigh on gold\u2019s price given their inverse relationship with one another.<\/p>\n\n\n\n

Yet, we would also like to note that the unemployment rate for May, which ticked upwards by coming in at 4.0% versus the previous rate of 3.9%, insinuating that the US labour market may not be as resilient, as was inferred by the NFP figure. Nonetheless, market participants appear to have glossed over the 0.1% uptick in the unemployment rate<\/strong> and may have focused predominantly on the unexpected surge<\/strong> in the NFP figure.<\/p>\n\n\n\n

The next hurdle for bullion traders may be the release of the US CPI<\/strong> rates for May, which are expected by economists to showcase persistent inflationary pressures in the US economy. In particular, the headline CPI rate<\/strong> on a yoy level is expected to come in at 3.4%, which would be identical to the prior rate. Yet the Core CPI rate on a yoy level is expected to showcase easing inflationary pressures<\/strong>, with economists anticipating the rate to come in at 3.5%, which would be lower than the prior rate of 3.6%.<\/p>\n\n\n\n

Nonetheless, we would place a greater degree of emphasis<\/strong> on the headline CPI<\/strong> rate, as it may increase pressure on the Fed to maintain interest rates at their current levels for a prolonged period of time, in order to combat inflationary pressures in the US economy. Such a scenario could provide support<\/strong> for the dollar<\/strong> whilst weighing<\/strong> on the bullion\u2019s<\/strong> price<\/strong>.<\/p>\n\n\n\n

China eases on its gold buying spree<\/strong><\/strong><\/h2>\n\n\n\n

According to a report by Bloomberg<\/a>, data which was released on Friday, showcased that China\u2019s Central Bank <\/strong>did not buy any gold during the month of May, ending an 18th-month buying streak which began in November 2022. The announcement following its release tended to weigh on the bullion\u2019s price, as China was considered to be one of the key driving factors<\/strong> behind the gold<\/strong> rally<\/strong> in the past year.<\/p>\n\n\n\n

As such, should the PBOC \u2018s demand<\/strong> for the bullion<\/strong> remain relatively muted<\/strong>, it could further weigh on the precious metal\u2019s price down the line. Yet, in our view, we believe the PBOC<\/strong> may be waiting for a more optimal opportunity<\/strong> to resume its gold buying spree, although that remains to be seen.<\/p>\n\n\n\n

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XAUUSD Daily Chart<\/strong><\/h3>\n\n\n\n
\"Technical<\/figure>\n\n\n\n