Article by: ETO Markets

Benefiting from a weaker dollar, gold saw a modest increase on Monday. According to the CME FedWatch tool, the likelihood of a rate cut in September rose from 59.5% to 66%. If U.S. economic data, such as the Fed's preferred inflation gauge PCE, aligns with market expectations, the probability of the first rate cut in September will significantly increase. Meanwhile, San Francisco Fed President Mary Daly's dovish remarks indicated that "the labour market is 'approaching' a turning point, and further weakening would mean rising unemployment. At this point, inflation is not the only risk we face." 

From a technical perspective, gold is still maintaining a head and shoulders pattern but has not broken the support of the upward trend line. As long as the $… support level holds, gold buyers may stage a rebound at any time, sustaining the bullish trend and pushing the price back above the 50-day simple moving average of $…, and further towards around $…. Conversely, if the $… support level is breached, the XAU/USD price will drop to $… from May 3rd, completing the head and shoulders top pattern with a target around $…