Gold holds near $4,364 as hawkish Fed repricing delays uptrend

Gold's rally stalled after a stronger-than-expected US jobs report triggered a hawkish repricing of Federal Reserve rate expectations, pushing the dollar higher and pressuring bullion.

COMEX gold traded at $4,363.70 an ounce, little changed on the session, after falling more than 4% last week on hawkish repricing of Federal Reserve monetary policy expectations.

"The uptrend in gold prices has been delayed due to a hawkish repricing of Federal Reserve monetary policy expectations," OCBC strategists said in a note Monday.

Spot gold posted one of its sharpest weekly corrections in recent months, declining more than 4% in the week ended June 5, according to Augmont Bullion. The selloff was driven by a stronger-than-expected US employment report that reset rate expectations and pushed the dollar sharply higher toward the 100 mark. Silver underperformed, dropping 9% on June 5 alone and closing the week 7% lower.

The week ahead centers on May CPI data and the University of Michigan inflation expectations on Wednesday. A softer CPI reading could revive dovish positioning and push COMEX gold back above $4,500, while a second consecutive upside surprise would bring the $4,200-$4,300 support zone into focus, Augmont said.

Support and resistance levels hold the key

Jateen Trivedi, VP Research Analyst at LKP Securities, said Rs 1,52,500 remains an important support level for MCX gold, while Rs 1,54,750 continues to act as immediate resistance in the near term. On COMEX, gold is expected to range between $4,376 and $4,510, with MCX gold trading between Rs 1,52,000 and Rs 1,63,000, according to Augmont.

Ravi Singh, Chief Research Officer at Master Capital Services, said MCX August gold futures closed above the crucial 55-day EMA despite the sharp decline, indicating buyers are still defending key support levels. The recent low near Rs 1,52,700 to Rs 1,53,000 now becomes an important support zone, with immediate resistance near Rs 1,56,500 and a stronger hurdle around Rs 1,58,500.

Dollar strength and geopolitical crosscurrents

Gold prices remained under pressure as escalating tensions in West Asia pushed crude oil prices higher, raising concerns over inflation and supporting the US dollar, said Jateen Trivedi. The stronger dollar and expectations of a prolonged higher-interest-rate environment continued to weigh on bullion sentiment. Despite ongoing geopolitical tensions, the inflationary impact of higher crude prices is currently providing more support to the dollar than to gold, he added.

International gold prices held steady near an 11-week low as markets assessed the halt in hostilities between Iran and Israel, which reduced safe-haven demand for bullion, according to Ravi Singh. Investors remained cautious ahead of the upcoming US CPI data, which is expected to provide fresh clues on the Fed's interest-rate outlook.

This article is for informational purposes only and does not constitute investment advice.