Gold bulls are not yet powerful enough to force a major turnaround

Gold Rebound Fades

Gold prices rallied in the latter half of last week following the release of the May PCE inflation report, which showed a smaller-than-expected month-over-month increase in inflation. Nevertheless, the two-day rebound lost steam amid ongoing geopolitical uncertainty and hawkish commentary from Federal Reserve officials. Minneapolis Fed President Neel Kashkari, previously regarded as one of the Fed’s more dovish members, indicated that broad-based inflationary pressures persist, supporting expectations for at least one interest rate hike this year.

Market attention now shifts to a series of U.S. economic releases scheduled for later this week. Traders are keen to extract insights on the Federal Reserve’s monetary policy trajectory, with the upcoming Non-Farm Payrolls (NFP) report expected to be particularly influential. The NFP data will likely shape gold price direction in the near term, alongside remarks from Fed officials. The data is expected to offer more direction to markets after largely mixed signals from core PCE data last week.

XAUUSD Forecast: Is a rebound coming?

Technically, the RSI currently sits below 35, suggesting mild oversold conditions but not yet signaling a reversal. This reading, combined with the recent downward momentum, implies that a bounce could be short-lived unless the broader trend changes. This week, good support is expected at the $3,960 area; with this zone held last week, failure to defend the mentioned support level has the potential to drag the pair further towards the $3,900/3,860 support zone. In other words, this is an area where we could see a lot of interest in the market, so we will have to pay close attention to it. On the flip side, a hurdle can be noted near the key resistance area of $4,100. A break and 4-hr closing above $4,100 shall trigger renewed buying interest, validating a rally towards the $4,160 and $4,200 resistance zone.

Bottom Line: Gold traders should closely monitor the critical support range between $3,950 and $4,000, along with the upcoming U.S. employment report, which will be pivotal in determining whether gold faces further downside pressure or if near-term buying interest will sustain prices above $3,900.

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