Spot gold was on the defensive in Asian trading on Tuesday, trading around $1775, maintaining a narrow range of shocks as a whole.
Global macro models and analysts at Trading Economics expect gold prices to fluctuate between $1750 and $1400 over the next 12 months.
Gold prices continued to fluctuate around $1780 on Monday, not far from a seven-week low of $1760 hit on June 17, amid conflicting signals from Fed officials to raise interest rates.
It is worth noting that gold futures are supported on a benchmark level of $1770. The contraction of the 200-day and 50-day moving averages is a warning to the recent trend of gold prices.
If this trend continues and the 200-day moving average falls below the 50-day moving average, a technical figure known as the "death crossover" will appear.
Last week, the price of gold closed at a high, with positions and trading volumes increasing. By contrast, gold will still try to break through the $1800 mark for the foreseeable future. From a negative point of view, the $1760 area remains a centre of activity.
The asset is trying to recover after falling $100 last week, but it is struggling. Gold prices rose after Friday's PCE report, but there is still not enough incentive for bulls to move sharply higher.
Based on Fed activity, Trading Economics analysts forecast the possibility of gold entering a downward trend over the next 12 months as follows:
Meanwhile, the Commerce Department said that according to US statistics, the PCE inflation index rose 3.4 per cent in May. According to the report, US inflation is growing at its highest rate since the early 1990s, but personal consumption remains stagnant.
Gold has been acting as a hedge to prevent the Fed from doing nothing to manage inflationary pressures. That is why gold prices fell sharply last week after the Fed admitted for the first time that it might need to act as soon as possible.
The data released on Friday reiterated the possibility of future inflation, but the lack of rising surprises helped gold regain some support.
Employment market
Initial jobless claims fell less than expected last week, suggesting that the rebound in the job market is slowing. In testimony to Congress last week, Federal Reserve Chairman Colin Powell (Jerome Powell) promised not to raise interest rates too quickly and stressed that the Fed would maintain its position of supporting the economy.
This week, analysts estimate that the United States created 675000 new jobs in June. Data above that level are bad for gold because of the increased risk of the Fed's hawkish stance, while below that level is seen as a good sign for gold.
However, the World Bank is not so optimistic about the future of gold. As previously reported, the World Bank expects gold prices to continue to fall in 2021 and 2022 as demand in key markets remains tight.
Whether we will see a gold consolidation this week depends on what investors think about inflation.
