GOLD Retreats Amid Market Uncertainty Technical + Fund.Analysis

The price of gold (XAU/USD) has recently pulled back from its weekly high, signaling a tentative stance from buyers. This retreat aligns with the uncertain market conditions, where conflicting factors are at play. On one hand, there is optimism surrounding the US debt-ceiling deal and a diminishing hawkish sentiment regarding the Federal Reserve (Fed). On the other hand, caution prevails ahead of crucial top-tier US data releases.

Notably, the positive China Caixin Manufacturing Purchasing Managers' Index (PMI) bolsters the upside momentum for XAU/USD. However, the probability of a 25 basis points rate hike by the Fed in June, standing at 40.0%, encourages gold buyers, further adding to the market dynamics.

Looking ahead, the focus will be on the US employment indicators and flash PMIs for May, as they will provide clearer guidance for market direction. Additionally, the final round of talks by the Fed before the pre-Federal Open Market Committee (FOMC) blackout period for policymakers will be crucial. Furthermore, close attention should be paid to the voting by US Senators on measures to avert default conditions, even though the bill is expected to receive substantial support in the Senate, where Democrats hold the majority.

If the slightly less hawkish bias from the Fed continues, supported by mixed US data, we may see a potential recovery in the gold price. However, if data releases remain positive and optimism for the US economy persists, XAU/USD bears may maintain their confidence. From a technical standpoint, the price continues to follow a bearish channel, with lower highs and lower lows, aligning with a pure swing trading strategy and the formation of ABCD patterns. Yesterday, after rebounding from the 61.8% - 78.6% Fibonacci area, the price experienced a new pullback in line with the bearish momentum. We anticipate a continuation of the bearish trend.