Gold price momentarily dropped below the critical zone of $1,800 an ounce on Friday as recession jitters mark the beginning of the year’s third quarter.
Safe-haven of choice
As the risk-off sentiment continues, the US dollar has turned out to be the safe-haven of choice; an aspect that has been weighing on gold price. As is the case with other precious metals and commodities in general, a strong greenback makes it more expensive for buyers holding other currencies. Since early-June, the previous resistance zone of $104.00 has been a steady support level for the currency.
With the heightened recession woes, investors are now keen on the Fed meeting minutes and nonfarm payrolls scheduled for release on Wednesday and Friday respectively. While analysts expect the payrolls to have slowed from the added 390,000 in May, it will likely signal a solid labor market. The forecast is for 250,000 in June as the unemployment rate remains steady at 3.6%.
The prediction is founded on the expected squeezing on employers by the higher interest rates and slowed economic growth. Strong job numbers may further exert pressure on gold price. This is based on the argument that it would be a sign for the Fed to continue with the aggressive tightening of its monetary policy.
Gold price technical analysis
Gold price ended Friday’s session at $1,810.10 after momentarily dropping below the critical level of $1,800 to an intraday low of $1,785.19. At that point, it was at its lowest level since late-January 2022. Notably, the precious metal recorded the third straight week of losses.
As shown on a daily chart, gold price is trading below the 25 and 50-day exponential moving averages. The formation of the head-and-shoulder pattern, which is a bearish formation, further indicates that it will likely remain under pressure in the short term.
In particular, it will likely continue to trade below the crucial level of 1,850 in the coming week. As the greenback continues to strengthen, 1,795.59 will be a support level worth watching as the bulls strive to defend the psychological level of 1,800. Past that level, gold price may drop further to 1,780.86. On the flip side, 1,822.45 and 1,834.58 will be viable resistance levels.