- Gold prices bounce back from $3,370 after Al Jazeera counters Trump’s statements regarding Iranian discussions.
- Unemployment continues to rise, housing data is underwhelming, and safe haven demand remains strong.
- The salary appears unchanged. Hawkish dot plots allow for comparisons with gold prices.
Gold is expected to trade steadily during the North American session on Wednesday, influenced by the Federal Reserve’s monetary policies. Meanwhile, tensions related to the Israeli-Iran situation are increasing.
Recent employment and housing data from the US indicates a slowdown in the economy, which may help mitigate losses in gold. As of now, XAU/USD is priced around $3,390, remaining stable.
Risk appetite has slightly improved following President Trump’s outreach to Iran. Initially, gold prices dipped after his remarks, but Al Jazeera reported—citing a source from the Iranian Foreign Ministry—that no delegation has been sent for further discussions. This news prompted a rise in XAU/USD from approximately $3,370 to its current levels.
In addition to geopolitical developments, a slew of US economic reports highlights a softening labor market, with new claims for unemployment benefits increasing as anticipated. While disappointing housing data affects investor sentiment, the primary concern still centers on the Fed’s actions.
Although the Fed may downplay certain tones, price adjustments are likely. Last week’s inflation data, encompassing both consumer and producer indices, indicates ongoing economic trends, and escalating tensions in the Middle East have pushed oil prices higher. This could influence the Fed’s approach, although the key takeaway will be reflected in the dot plot within the September Economic Forecast Summary.
If two members adjust their dots upward, it suggests the Fed, led by Powell, might anticipate only a single rate cut. Consequently, this hawkish outlook could exert downward pressure on gold prices. On the flip side, if XAU/USD manages to surpass $3,400, it could signal a more bullish trend.
Daily Market Update: Gold Prices Remain Below $3,400 as Businesses Await Fed Decisions
- Recent US economic statistics indicated new unemployment claims rose to 245,000 for the week ending June 14th, aligning with market predictions. Ongoing adjustments brought the total to a seasonally adjusted 1.945 million, a decrease of 6,000 from the week concluding June 7th.
- The housing market shows signs of cooling, with home openings in May dropping to 1.256 million units, a 9.8% decrease from April’s figures. Building permits also fell, down to an annual rate of 1.393 million, a 2% drop.
- The US Dollar Index (DXY), which tracks the dollar against six major currencies, declined by 0.18%, settling at 98.64.
- US Treasury yields fell, with the 10-year Treasury yield dropping below 4 basis points (bps) to 4.367%, while actual US yields fell to around 2.057%, nearly a 5 bps decrease following recent legal developments.
- Money markets reflect that traders are pricing in a 46 basis point easing by year-end, based on Prime Market terminal data.
Gold Outlook: Prices Hover Near $3,400, Awaiting a New Catalyst
Gold prices display an upward bias, but traders are exhibiting caution as they await the Fed’s decisions, evidenced by consecutive doji formations. The relative strength index (RSI) remains flat yet bullish. Should Powell and the other governors lean hawkish, a rise above the $3,400 mark is plausible.
In terms of resistance, the next significant level is $3,450, with a potential peak near $3,500 in the short term. Conversely, if XAU/USD drops below the day’s low of $3,370, a deeper pullback to $3,350 could occur, with key support located at the 50-day Simple Moving Average (SMA) of $3,301, and an advanced support level of $3,167 from April.
