Gold was pushed down by a strengthened US Dollar and higher oil prices. Economists and major banks disagree over the likelihood of a recession, although current economic metrics in the job market and everywhere else are significant.
The Atlanta Fed’s GDPNow estimates real GDP growth of 0.9% for Q2. The strength of safe-haven assets, such as the US Dollar, is being fueled by unpredictability. Bullion prices are harmed by the stronger US dollar.
Rising oil prices raise inflation forecasts, prompting traders to sell government bonds, which will ultimately result in the rise of interest rates. An increase in oil prices, in the short run at minimum, serves to sustain inflation forecasts. Oil prices are a critical element of market-based inflation bets, hence the Fed is primarily concerned with inflation. However, if oil costs keep increasing, gold prices will surely be negatively impacted.
The consumer price index (CPI) is due to cross the lines on June 10th, which will provide the latest development in the US inflation narrative. Considering that the Fed’s June and July meetings have been well scripted, June 10th CPI figures may have minimal impact on the Fed’s route ahead. A considerably enhanced print, on the other hand, might tighten up bets later in 2022, particularly if it pulls long-term inflation expectations further, leading expectations to become unanchored, prompting a Fed response.
The 61.8 % Fibonacci retracement and a crucial trendline from 2021 are slightly under gold prices. The 200-day Simple Moving Average (SMA) is right beneath. A break below that SMA might lead to a plunge to the psychologically significant level of 1800.