By: Editorial Team, StoneX Media
Gold's next major move may depend less on its own price chart than on the path of Federal Reserve interest rate policy and the labor market data that shapes it. After a steep decline from its yearly high, gold has spent seven straight weeks compressing into a narrow range just above its lows, with momentum grinding to its weakest reading since late 2023. A market this tightly wound rarely stays quiet for long, and the catalyst for the break may arrive from the economic calendar rather than the technical setup. That places employment data and Federal Reserve rate expectations at the center of gold's next directional move.
Michael Boutros, Senior Market Analyst at FOREX.com, has more than 20 years of experience trading foreign exchange, commodities, and equity indices across multiple trade desks, applying a structured technical approach across several time frames. His medium-term, event-driven focus spans the currency, commodity, and macro markets where Federal Reserve policy and employment data most directly move an asset like gold.
"So I think from the fundamental backdrop that headwind for gold may be abating", Boutros says, pointing to a shift in Federal Reserve rate expectations. Gold has traded under pressure while markets price roughly a 63% chance of a further quarter-point rate increase, because higher interest rates raise the opportunity cost of holding an asset that pays no yield. Boutros notes that those increases are already largely priced in, and that the real risk now runs the other way, toward fewer hikes than expected rather than more. As a result, if that policy headwind continues to ease, one of the primary forces weighing on gold would begin to lift, improving the odds that its seven-week contraction resolves higher rather than lower.
The most immediate catalyst for gold is the labor market, with ADP employment and nonfarm payrolls both due as major event risk on the economic calendar. Boutros does not expect a large reaction to the releases themselves, but flags the direction of any surprise as what matters most for gold. According to Boutros, "if employment starts to deteriorate, then that could really weigh on the Fed's options with regards to fed hikes". A softer jobs market would give the Federal Reserve room to step back from further tightening, removing the very headwind that has pinned gold near its lows. That makes the employment data a more likely trigger for gold's next directional move than any single chart level.
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--- Written by Gus Farrow, Senior Manager, StoneX Media
--- Expert: Michael Boutros, FOREX.com Senior Market Analyst
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