Last Friday, on June 7th, gold prices fell again as robust U.S. non-farm payroll data for May fueled market expectations for a Federal Reserve interest rate hike within the year. This week features relatively few major economic events. Beyond regular data releases, the focus will remain on Middle East developments and the Fed's monetary policy stance.
Monday, June 10th - The most significant news over the weekend was Iran's launch of ballistic missiles at an Israeli air base. Iran described the action as a "warning strike" in response to recent Israeli military operations in Lebanon. Israel claimed to have successfully intercepted all missiles and announced it would respond with force. However, a key development followed – former U.S. President Trump reportedly called Israeli Prime Minister Netanyahu, pressuring him not to retaliate. Netanyahu ultimately accepted the U.S. position.
While geopolitical risk premiums persist, they are insufficient to trigger a sharp rally in gold. The market has become notably desensitized to verbal conflicts. Furthermore, last Friday's strong non-farm payrolls report was the primary driver behind gold's decline, with 172,000 new jobs added—double market expectations. Rate hike expectations surged, with the market fully pricing in a 25-basis-point increase by year-end, with the probability briefly exceeding 70%. This is a key factor behind gold's continued retreat.
From a technical perspective, gold extended its decline after today's opening, breaching the 4300 level. This indicates that bearish momentum remains strong. Early in the week, prices may oscillate above 4300, potentially with some corrective rebounds, but the upside is likely limited. Resistance near the previous low around 4365 should be watched. If prices fail to sustain above this level, gold is likely to extend its decline. A renewed break below 4300 could push the low towards the 4260-4250 area.
In summary, the strong headwind from interest rates persists, while the weak support from geopolitics is unlikely to last. The technical breakdown suggests bears are in control. With no major data scheduled for today, the Asian and European sessions may see consolidation, with the true direction more likely to emerge when liquidity returns during the U.S. session. Intraday fluctuations may be limited. It is crucial to maintain light positions and avoid heavy leverage. Should the price break below 4300 ahead of schedule, adding to short positions could be considered.
Therefore, the following trading strategy is suggested for the day:
Gold: Consider selling in the 4312-4315 range, with a stop-loss at 4325, targeting 4260-4250. If the price fails to break below 4300 before the U.S. session opens, abandon the short position and consider a long position instead.
Key financial data and events to watch today, Monday, June 10th:
23:00 - U.S. New York Fed 1-Year Inflation Expectations for May.
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