Comex Gold may trade above crucial support amid Fed jitters

In anticipation that the Fed will pause its rate hike cycle or not, Gold prices turned in sluggish mode since the start of the month.

The instrumental trading was indecisive as markets hunkered down before a Federal Reserve interest rate decision next week. Amid speculation over whether the central bank will hike or hold interest rates, following mixed signals on the move over the past week.

Yesterday, it gained virtually more than half per cent supported by weak U.S. service sector data. Which weighed on the dollar slightly lower and fed into bets that the world’s largest economy was cooling.

After statistics on Monday revealed that the U.S. service sector barely expanded in May, winding down months of strong growth as the labour market ran out of steam, the yellow metal recovered from over two-month lows.

The data put some pressure on the dollar, off from near 11-week highs hit recently. This resulted in some recovery in metals prices, particularly safe-haven assets such as gold.

Gold futures rose by 0.24% to $1,974.30 an ounce on a closing basis. Spot Gold settled at $1961.22 an ounce, up 0.70% Both instruments rose after the U.S. data.

The focus of the market may turn toward Chinese inflation and trade data. Numbers are to be released later in the week. As the post-COVID economic boom fizzles out, this could offer additional hints about commodity demand in the nation.

Further, the FOMC meeting where the interest rate swaps and futures markets are not expecting a hike. They have placed a roughly 70% probability of a 25 basis point lift at the July meeting though.

Future data points may influence speculation over the rate path, which could lead to volatility spikes.

Technical Outlook

Since 30 May 2023 Comex Gold futures trading above the crucial support of $1935.00 and consolidating above it. Yesterday, prices recovered from the day’s low $1953.80 and settled at $1974.30, up by 0.24%.

Formation of a high wave candlestick after the steep fall is indicating for a indecisiveness in the near future. However, prices holding above its crucial support $1935.00 which is creating a probability for pullback from every dip. Unless, it gives a closing below it.

Comex Gold prices appear to give pullback from every dip towards $1968-$1965.50 in near future. And may test  $1985.50-$1998.50 on the upside.

Alternatively, on the downside crucial support intact at $1935.00, below it only prices may change the direction and could take a deep dive towards $1925.00-$1890.00.

Looking at the MCX Segment, Gold Future is holding above 59200.00, traders may keep a positive bias for the upside target 60300-60800.00, and any dip towards 59500-59400 could attract buying activities.

On the downside, a break below 59200 will open the door for a fresh crunch. Prices may drop towards 58450-58200.