Gold Rebound Stalls as Selling Pressure Resurfaces on Economic Data

After experiencing one of its most severe declines in recent history, gold has staged a partial recovery. However, according to Giuseppe Dellamotta, a market analyst at financial news provider Investinglive, this bounce-back masks underlying vulnerabilities. The technician estimates that roughly half of the metal’s recent losses have been recovered, yet this recovery reflects market mechanics rather than a fundamental shift in investor sentiment.

Technical Rebound Masking Fundamental Challenges

Dellamotta’s assessment suggests that while technical indicators may support a temporary rally, the broader fundamentals remain headwinds for sustained gold appreciation. The precious metal is expected to consolidate within a trading band below recent peaks or potentially face a fresh wave of declines should market conditions deteriorate. This cautious stance reflects growing concerns among market participants about the trajectory of U.S. monetary policy and economic resilience.

The near-term outlook has been complicated by a steady stream of positive U.S. economic data, which undermines traditional gold demand drivers. Monday’s ISM Manufacturing Index beat expectations, with the orders component hitting its highest level since 2022, signaling continued industrial strength. While this data did not immediately reignite heavy selling pressure—partly because Federal Reserve officials remain focused on labor market conditions and price stability—it reinforced the view that sustained interest rate cuts are unlikely in the near term.

Economic Data Reshaping Rate Expectations

Investors are now bracing for two critical economic releases scheduled for today: ADP Employment Figures and ISM Services Activity, which could meaningfully shift rate market expectations. Should these reports exceed forecasts, the probability of more aggressive Fed rate hiking could resurface, creating additional headwinds for gold, which thrives in low-rate environments. Conversely, disappointing figures could extend gold’s rebound, particularly as market participants approach next week’s employment report with considerable caution.

Dellamotta noted that market positioning remains fragile ahead of these key data points. A stronger-than-anticipated economic picture could prompt investors to reassess inflation risks and adjust their rate expectations accordingly—a dynamic that would exert renewed selling pressure on precious metals prices. On the flip side, softer data would likely support gold’s ability to challenge or potentially surpass its recent highs, at least temporarily.

The Road Ahead: Navigating Volatility

The current environment underscores gold’s vulnerability to shifts in real interest rate expectations. As the markets juggle competing narratives between economic resilience and potential monetary policy shifts, gold remains caught between recovery attempts and corrective risks. The coming days will be instrumental in determining whether the rebound gains traction or whether another downward correction emerges.