XAUUSD - Struggling due to lack of liquidity with FOMC and NFP

Gold prices rebounded in European trading as the US Independence Day holiday put pressure on the US dollar. However, as the US trading session approached, prices could face difficulties due to low liquidity with the FOMC and NFP reports still to come this week.

The probability of a 25 basis point interest rate hike from the Fed in July has increased to 86.2%, up from 53.5% a month ago and 76% a week ago. Despite the higher probability of a rate hike, concerns about the possibility of an economic recession have also increased due to poor manufacturing data in recent weeks. This could partly explain the short-term recovery in gold prices after briefly dropping below the psychological level of $1,900.

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During the US holiday, trading expectations in the US are low, with prices likely to stay within the range of $1,918-$1,930. Market participants are eagerly awaiting the release of the FOMC statement on Wednesday, hoping for a catalyst that could lead to a breakthrough in the price range of $1,890 and $1,945.

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According to technical analysis, the gold price has created higher highs and lower lows, with the lower lows acting as strong resistance levels that limit upward movement. Breaking the $1,900 mark last week was not accepted as the precious metal quickly rebounded. As long as concerns about economic recession persist, gold may still find support as its safe haven appeal increases. A daily candle closing below $1,900 is necessary to see further declines in gold prices at this stage.

There is a reducing wedge pattern on the daily chart below, indicating a potential breakout to the upside rather than a price decline. The key levels to watch are $1,975 and $2,000.