XAU/USD sees no decisive bet at the open on the formation of a triangle

  • The price of gold could swing below $1,900 as investors focus on US inflation.
  • The rise in the US NFP boosted the odds of a giant rate hike in June.
  • US inflation is seen as lower at 8.1% vs. 8.5% previously.

The price of gold (XAU/USD) is expected to open on Monday and will likely perform subdued on runaway catalysts favoring a rate hike by the Federal Reserve (Fed) in June. Inflation will persist longer due to rising fossil fuel prices and high commodity costs due to the multiplier effects of helicopter money and the Russian-Ukrainian war. Today, US non-farm payrolls (NFP) optimism bolstered the odds of a massive rate hike by the Fed in June.

The US central bank raised its interest rate by 50 basis points (bps) in May to tame decades-long inflation. Now, strong job creation in the US economy at 428,000, well above the consensus of 391,000, bolstered another 50 basis point rate hike in June. The jobless rate was unchanged at 3.6% and, according to the report, it was led by gains in recreation, hospitality, manufacturing, transportation and warehousing.

It seems possible that a tight labor market will push up the labor price index and that higher household incomes will lead to much higher inflation in the US economy and eventually impact oil prices. gold.

This week, US inflation will remain in focus, which is expected to land at 8.1% versus a previous print of 8.5% on an annual basis. A weaker inflation impression may reduce the chances of a giant rate hike, but general inflation is still higher, necessitating another mega rate hike.

Gold technical analysis

The precious metal forms a symmetrical triangle chart pattern on an hourly scale, which signals indecision in the sentiments of market participants. The 20-period exponential moving average (EMA) at $1,882.16 overlaps prices, signaling consolidation ahead. Meanwhile, the Relative Strength Index (RSI) (14) is hovering in a range of 40.00-60.00, which advocates directionless movement.

Gold hourly chart

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