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GOLD PRICE FORECAST: Gold prices have held up despite the strong ISM statistics for the US dollar. The nonfarm payrolls report is due in June, and the focus could be on wage inflation. The chart arrangement suggests that the downward momentum is fading. Despite strong selling pressure in the aftermath of the US ISM manufacturing figures, gold prices held up strongly. While employment fell and growth stagnated, overall activity levels remained near multi-year highs. In the meantime, input costs have risen sharply. The markets interpreted this to suggest that the timetable for the withdrawal of stimulus is moving forward (as expected). Bullion gained ground despite a backdrop that boosted front-end yields and the US Dollar. The lack of action could be due to apprehension as the release of the US jobs data in June approaches. Traders may have simply avoided dictional commitment until the important data arrived on the wires. It will almost certainly be assessed through the lens of Fed policy expectations as well. Even as unequal supply chains and component shortages drive prices sharply higher, the latest leading survey data suggests that growth is switching from acceleration to cruise control. Similarly, a mediocre – or even slightly disappointing – headline payrolls figure may be dismissed if wage inflation exceeds the predicted 3.7 percent (which would itself be a three-month high). This might be interpreted as bolstering the market’s more hawkish perspective. One rate hike is already priced into Fed Funds futures for 2022. In such a scenario, the Greenback is likely to extend its recent surge, increasing in tandem with a further rise in short-term interest rates. This challenges gold on two fronts: first, as a non-interest-bearing asset and second, as an anti-fiat alternative. TECHNICAL ANALYSIS OF GOLD In the 1755-65 congestion area, gold prices are sitting atop support. The presence of positive RSI divergence indicates that downward momentum is fading. This could indicate a period of digestion before the bearish trend resumes, but it could also signal the start of an uptrend. The 1797.63-1808.40 area provides immediate resistance. A daily closing above that level might pave the way for a move higher to 1850. A daily-close-confirmed breach of support, on the other hand, may set off a decline toward the March low of 1676.10, with some friction near 1720.80 probable along the way. TradingView was used to build a gold price chart. RESOURCES FOR GOLD TRADING—- Ilya Spivak, DailyFX’s APAC Head Strategist, wrote this article. Use the comments area below to contact Ilya, or follow him on Twitter at @IlyaSpivak./nRead More

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