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Despite a sharp drop in Gold following Friday’s upbeat Non-Farm Payrolls report, the broader picture still favours the bulls — especially with markets now pricing in a near-certain rate cut.
Friday’s stronger-than-expected NFP report momentarily reignited risk appetite, pushing Gold lower as traders rotated into risk-on assets. However, the more telling reaction came from the Fed funds futures market: rate cut expectations surged to 99.9% for the June 18th meeting (source: CME FedWatch Tool, June 9, 2025).
This shift points to an increasingly dovish monetary environment, and by extension, a weakening dollar — a structural tailwind for Gold. That said, while the recent pullback looks sharp, it may simply be a healthy correction in an ongoing bullish cycle.
Three Technical Scenarios in Focus (XAU/USD)
Gold has broken out of a descending trendline, a potential bull flag, on the 4H chart and is now retesting it — a classic breakout-retest setup.
This retest area also aligns with the 38.2% Fibonacci retracement, Point of Control from the Volume Profile, and Anchored VWAP from the May low at $3,123. In short, this zone (A) is a powerful confluence zone where bulls may reassert control.
Scenario A – Bounce at 38.2% Fib
If price holds here, it would confirm a hidden bullish divergence on the 4H chart — a strong signal that momentum is building even as price consolidates. This setup offers a high-probability continuation play back toward $3,427.7 (recent swing high), with further extensions to $3,448.2 and $3,509.9 (ATH).
Scenario B – Deeper Pullback to 61.8%
A dip toward the 61.8% Fib (Golden Pocket — regarded as the most powerful Fibonacci retracement) would test another high-volume node (HVN) on the volume profile. This would still be considered a healthy correction within the broader uptrend, particularly if the reaction is supported by volume absorption and renewed buying interest.
Scenario C – Overshoot to 78.6%
While the 78.6% retracement does line up with a high-volume node, the volume here is significantly thinner compared to earlier HVNs. A move this deep could signal waning momentum and open the door to a larger correction. A bounce here could simply result as a retest of the $3,301.7 Point of Control, before further downside. This would not invalidate the long-term bull thesis, but it would delay it.
Other Considerations
The S&P 500 is currently looking weak, as per our analysis last week. This comes off the back of weak ISM data, and while NFP looked good for the jobs market, the SPX is indeed at a crossroads. A correction here would be healthy; and would fit with the narrative of Gold rising in the meantime due to their inversely correlation.
Closing Statements
With strong confluence zones lining up across multiple Fibonacci levels and anchored indicators, this dip may be a gift for patient bulls. Keep an eye on the 4H chart — momentum may be brewing just beneath the surface.
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SPX at a Crossroads: Weighing Weak Data Against Resilient Markets
DISCLAIMER: For educational purposes only. Trading comes with substantial risk, leading to possible loss of your capital. Traders are advised to do their own due diligence before investing.
