Muted Action in Gold

Despite the major data and event risk this week, gold prices have remained range-bound with traders struggling to establish a clear directional signal on the back of the week’s events. On the data front, both CPI and PPI cooled again last month. CPI was seen cooling for a second consecutive month to 3.3$ from 3.4% prior while PPI was seen falling to -0.2% from 0.5% prior and 0.1% expected, its largest monthly drop since October 2023.

Hawkish Fed Comments

Despite broadly dovish data, the June FOMC saw the Fed striking a more-hawkish-than-expected tone which threw traders something of a curveball. Inflation forecasts for the year ahead were revised higher while the Fed’s dot plot forecast was revised lower (now see 1 cut this year down from 3 prior). Powell warned that inflation was stull too high and would likely delay the Fed’s easing cycle.

Bullish Risks for Gold

Powell’s comments tempered the initial move lower in USD, halting the rally in gold futures for now. Looking ahead, gold prices should remain supported given the uptick in easing expectations for September. A cut in Q3 is now prices over 60% from around 50% at the start of last week. The key focus for traders now will be monitoring incoming US data and Fed speak through early summer. If inflation continues to moderate, near-term easing expectations should grow, supporting gold price.

Technical Views

XAUUSD

For now, gold futures remain above the 1,275.43 level which can be viewed as the neckline of a potential head and shoulders pattern. Given the bull trend, however, while this level holds the focus is on a further push higher and a fresh test of the current highs around 2,364.93. Should we break lower, 2,149.72 and the bull channel lows will be key support to watch.