gold futures (GC)

Gold (GC) Futures Prices Could Plummet After Jerome Powell’s Hawkish Testimony

  • Improved risk sentiment is pushing gold prices lower.
  • The dollar rally might resume as the Fed is not planning to pause its mission of rate hikes.
  • The price of Gold is consolidating on the charts.

Gold futures (GC) prices are pushing slightly higher on Friday after a bearish close yesterday as commodities continued declining across the board. This decline is fueled by the risk of a recession growing daily as central banks like the Federal Reserve continue to raise interest rates. This decline has also been caused by the weaker dollar, which is on course for its first weekly decline this month.

There has been a bit of improved risk sentiment in the market, with oil prices pushing lower. This improvement has come because lower fuel prices could mean lower inflation, which has seen equity markets push higher. It is for this reason that the gold (safe-haven metal) has been pushed lower.

“Inflation will remain elevated and above target, but it’s increasingly likely it will start to peak over the next few months.” Markets could take that reasonably well – there’s potential for recovery later in the year,” said Andrew Hardy, investment manager at Momentum Global Investment Management.

Jerome Powell restated the Federal Reserve’s commitment to lowering inflation yesterday and admitted that it might push unemployment up.

“We need to restore price stability … because without that, we’re not going to be able to have a sustained period of maximum employment where the benefits are spread very widely,” Powell told the U.S. House of Representatives Financial Services Committee. “It’s something we need to do, and we must do.”

Investors expect the Fed to raise rates by 75 bps in the July meeting and 50 bps in the September meeting.

Gold (GC) futures technical forecast:

Gold futures (GC) 4-hour chart
Gold futures (GC) 4-hour chart

Looking at the 4-hour chart, we see the price caught in a range with resistance at around 1846.5 and support at around 1823.4. Within the range, the price trades below the 30-SMA, showing bears are in control. The RSI is trading below 50, also favoring bearish momentum.

If bears can keep up their momentum, we might see a break below the support, leading the price to retest the June 14 low at 1806.1. However, if support holds firmly, bulls might return to push the price back to range resistance.