Gold price (XAUUSD) experienced a minor upward correction since the post-NFP selling pressure. However, the upcoming high-impact release, with a potential bearish reversal price pattern, could make XAUUSD an attractive investment opportunity.
Strong NFP Supports Gold Bears
The increase in interest-rate expectations in the US is the major factor contributing to the decline in gold prices. The better-than-expected US jobs data released on Friday reduced the probability of the Federal Reserve (Fed) reducing interest rates in September, suggesting that inflationary pressures were still present. The opportunity cost of retaining non-yielding gold increases with interest rates, rendering it less appealing to investors.
According to CME FedWatch tool data, which employs 30-day US Fed Fund Futures pricing, market expectations for a September interest rate cut decreased from 67% to just over 50% after the NFP release. The current probability is approximately 54%.
Global Interest Rates Support Gold Bulls
Nevertheless, gold is supported by the more subdued outlook for global interest rates. The European Central Bank (ECB) and the Bank of Canada (BoC) both recently reduced their overnight rates by 0.25% to 4.75%. A decrease in inflation data in Switzerland has prompted speculation that the Swiss National Bank (SNB) may further reduce interest rates at its June 20 meeting, following an initial reduction in March.
Gold traders anticipate the conclusion of the Federal Reserve's June meeting on Wednesday and the release of the US Consumer Price Index (CPI) data for May on the same day for additional price direction cues.
