Expert: The price of gold could fall with these developments next week!

Gold prices lost their bullish momentum last week as the US dollar strengthened. The better-than-expected US nonfarm payrolls report underscored the Fed’s economic confidence. Market analyst Daniel Dubrovsky says crude oil prices and the US CPI report for May could keep gold prices under pressure. For our readers, we have prepared the expert’s market analysis with his own narrative.

“Tough times are coming for gold prices”

As you can see from news , gold price is higher bullish last week Could not find acceleration. In fact, the precious metal has mostly changed very little. In general, gold has seen its downtrend since the mid-March break, rallying as high as 3.11% before collapsing gains. Is the yellow metal losing its uphill battle and ready to continue its broader downtrend?

As markets do not typically move in a straight line, the downtrend pause remains a challenge for gold, with a downtrend pause potentially signaling profit-taking or consolidation. In May, traders turned from inflation worries to recession worries. This caused markets to significantly scale back expectations for a Federal Reserve rate hike in 2023.

This means that the probability of a 50 basis point hike in September is reduced. As a result, Treasury rates and the US dollar weakened. If these assets move in the same direction, down in this case, it bodes well for gold and vice versa. But last week we saw the Fed feel confident about the economic outlook, undermining expectations for a September pause.

As a result, bond yields will rise again and the US dollar could strengthen again. Last Friday, another robust nonfarm payrolls report broke through the wires, underscoring confidence in the central bank. Not surprisingly, gold prices fell as the US dollar strengthened and government bond yields rose. Therefore, more difficult times await the yellow metal.

“Rising Dollar and Bond Yields Reduce Gold’s Attractiveness”

All eyes will be on the May US CPI report next week be directed. Headline inflation is still expected to remain unchanged at 8.3% yoy, same as in April. The core indicator, which excludes volatile food and energy prices, is expected to slow to 5.9% annually, down from the previous 6.2%.

With crude oil prices at their highest since early March, it seems unlikely that inflation will go away for the time being. Therefore, a strong dollar and higher bond yields could continue to combine to reduce gold’s attractiveness.

US 10-year real interest rate chart with gold price

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