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Gold prices are seeing some weakness today against the backdrop of a stronger US Dollar. The greenback has been well bid on the back of better-than-forecast GDP data yesterday and a slew of hawkish comments from Fed’s Powell this week. With traders eyeing a fresh.25% hike in July, metals have weakened further this week and look poised for more downside while the USD rally continues.

Gold prices are now down around 8% from the YTD highs. A resurgence in hawkish Fed expectations in recent weeks has weighed heavily on gold prices. Additionally, with equities showing resilience, traders have been caught between moving capital into stocks or into USD. Meanwhile, gold has seen a steady outflow of demand.
 

Near-Term Risks

Given that the market is now moving firmly towards pricing in a July hike, however, this does create some near-term risks. If we see any data which challenges this narrative, USD is vulnerable to a downside shock which would see gold prices rising. One event to watch in particular will be next week’s US labor-market data. If we see any surprise weakness in those readings, this might cause some upward movement in gold prices-near-term.
 

Technical Views

Gold

The reversal in gold from the 2069.41 level has seen the market trading sharply lower. Price has recently broken below the 1973.51 level support and the bull channel lows. While below here, the focus is on a test of the 1871.04 level support next with 1805.18 sitting below as deeper support to note. 

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