Investing.com – Gold faces a challenge to its breakout hopes on expectations that the Federal Reserve will end its tightening cycle. Gold recorded weekly losses due to higher prices.

Gold price last week

Gold ended lower on Friday. Gold futures contracts (futures) were the most active at $1,942.60 an ounce in late trade, up 20 cents during the day, after officially ending the session at $1,942.70. However, losses in the previous three sessions after the US Labor Day holiday on Monday signaled a negative week for gold futures, which ended the five-day period with a net decline of 1.2%, effectively erasing last week’s 1.3% gain.

The spot, closely watched by some traders from futures contracts, fell 57 cents, or 0.03%, to settle at $1,919.15. During the week, the spot price, which reflects actual bullion trading, fell 1.1% against a 1.3% gain in the previous week.

Why did the price of gold go up before it went down?

The last gains were on the back of the US non-farm payrolls report for August, which saw 187,000 jobs added in July and an expected 170,000 unemployment rate, which rose to 3.8% from 3.5%.

Rising unemployment fueled speculation that the Federal Reserve will keep interest rates unchanged when it meets on Sept. 20 to review U.S. monetary policy, which temporarily lifted gold last week.

But as the week began, speculation resurfaced that the central bank would push for another rate hike before the end of the year in an effort to bring inflation back to its 2% annual target.

Inflation, as measured by core inflation, or CPI, fell to 3% in June this year from four decades of more than 9% annually in June 2022. But as of July, it has started to rise again, reaching 3.2%. This raised the possibility of the central bank turning hawkish again, having already hiked interest rates by 5% over the past 18 months. That sent the dollar index to its highest level in six months.

Gold Technical Analysis: Why Gold Has Failed to Sustain Its Highs?

Since the latest nonfarm payrolls report came out a week ago, spot gold has moved up $15 an ounce, trading in the $1920-$1925 range from below $1940 on September 1.

Gold chart expert Sunil Kumar Dixit said that the same $15 price would have to break that level for a new price trend to emerge.

Dixit said the most important thing for gold bears now is to push below the key support at $11,915.

For long positions, this is a clear break above the $1930 resistance, he said.

“Gold had another interesting week, with last Friday’s jobs report seeming like a distant memory,” said Ed Moya, an analyst at online trading platform OANDA.

Moya pointed out that gold’s decline this week came on the back of U.S. economic data that suggested a soft landing rather than a severe recession could be the scenario for the world’s largest economy by the end of the year.

Referring to the upcoming August update of the CPI and CPI (Consumer Price Index), he said, “While we await inflation data next week and the Fed meeting next week, the yellow metal may have found a firm base in the $1900-$1950 region.” ) from Central Bank.

Next week most important gold price prediction

SKCharting’s Dixit noted that gold’s immediate rally from the confluence of the $1,915 support zone, marked by the daily Bollinger Band average and 200-day SMA, met resistance at the 50-day moving average at $1,930, leading to a rebound. .

As Dixit said, “But there is a glimmer of hope for the bulls to continue their upward advance to the $1930 retracement with a settlement above the indicated inflection point.” And, “A break above this area would put gold back on an upward path at $1940-$1948.”

A strong acceptance above $1948 would support the next highs of $1971-$1975, he said.

And “Failure to sustain this support group could see gold decline to $1910, followed by the 50-week moving average of $1899. A break below $1899 opens the way for deeper losses.

He said significant bearish support was seen at the mid-monthly Bollinger band at $1858.