Gold and USD/JPY Outlook: Two Trades Worth Watching

Gold

Gold fell 12% in June, prompting questions over whether further downside is likely, while USD/JPY remains in focus amid intervention concerns.

Gold has rebounded above the 4,000 level but is still set to record a 12% monthly loss in June—its steepest decline since October 2008. The drop reflects a broader market shift away from geopolitical risk premiums and back toward concerns over elevated U.S. interest rates.

The metal is also heading for its first quarterly loss since 2024 and its largest three-month drop since Q2 2013.

The selloff has been driven by rising expectations that the Federal Reserve will continue tightening policy. After a hawkish FOMC meeting and persistently high Core PCE inflation at 3.4%, markets are now pricing in more than a 60% chance of a 25-basis-point rate hike in September, with up to three hikes still seen as possible this year.

These expectations have pushed the U.S. dollar to a 13-month high, while higher real yields have increased the opportunity cost of holding non-yielding assets like gold.

Together, a stronger dollar, rising real yields, and a hawkish Fed stance continue to pressure gold prices.

Market attention now shifts to Fed Chair Kevin Walsh’s remarks at the ECB Sintra Forum and Thursday’s U.S. non-farm payrolls report, which could offer further clues on the rate outlook and gold’s direction.

For a sustained recovery, gold would likely need lower real yields, a weaker dollar, or a reversal in hawkish Fed expectations—none of which currently appear imminent.

Gold Forecast – Technical Analysis

Gold has broken down from its symmetrical triangle formation and slipped below the 200-day simple moving average, hitting a low of 3,942—its weakest level since November.

The 50-day SMA has now crossed beneath the 200-day SMA, confirming a bearish “death cross” signal. Alongside an RSI reading below 50, technical indicators continue to point toward downside momentum.

On the downside, sellers may target 3,930—the November low—followed by 3,800. A break beneath that level could open the door toward the psychological support zone around 3,500.

On the upside, any recovery would first need to reclaim 4,100, which aligns with this week’s high and the March low. Beyond that, resistance is seen near a declining trendline around 4,300, followed by horizontal resistance at 4,350. A sustained move above this zone would bring the 200-day SMA near 4,500 back into focus.

USD/JPY

USD/JPY has surged to a 40-year high above 162, heightening concerns that Japanese authorities may intervene to support the yen.

The currency has weakened to levels last seen in 1986, increasing speculation that Tokyo could step into the market in the near term, even as the U.S. dollar has eased slightly from its 13-month peak.

The yen is down 2% in the second quarter, marking its fourth consecutive quarterly decline and the longest losing streak in four years, as the wide interest rate gap between the U.S. and Japan continues to weigh on the currency.

Finance Minister Satsuki Katayama has reiterated that authorities are prepared to act at any time if necessary. Historically, interventions have often occurred during periods of thin liquidity, and with a holiday-shortened trading week, conditions could be conducive to action.

The key market debate is increasingly shifting from whether intervention will occur to when it might happen. However, unless any intervention is supported by a narrowing U.S.-Japan yield differential, its impact is likely to be short-lived.

Previous interventions in late February and early May briefly strengthened the yen, but USD/JPY resumed its uptrend as markets quickly re-priced U.S. rate expectations. In that context, intervention has often been faded, as underlying macro forces remain unchanged.

The carry trade continues to be supported by the persistent yield advantage in the U.S., keeping upward pressure on USD/JPY.

Recent hawkish Federal Reserve signals and sticky Core PCE inflation at 3.4%, a three-year high, have led markets to price in around a 60% chance of a 25-basis-point rate hike in September, with expectations of up to three hikes this year.

Looking ahead, attention turns to Federal Reserve Chair Kevin Walsh’s remarks at the ECB Sintra Forum, alongside Thursday’s U.S. non-farm payrolls report. Ahead of that, U.S. consumer confidence and JOLTS job openings data will also be closely watched for further clues on the interest rate outlook.

USD/JPY Forecast – Technical Analysis

USD/JPY has broken above the upper boundary of its rising wedge pattern, extending gains to a new 40-year high at 162.40 and effectively invalidating the prior bearish reversal setup.

Momentum indicators show the RSI in overbought territory across multiple timeframes, suggesting the pair may pause for consolidation before attempting further upside.

On the bullish side, buyers are now eyeing a move toward 165, with the longer-term projection extending to 170 if momentum persists.

On the downside, initial support is seen at 160.20, followed by the key psychological level at 160.00. A break below that zone would expose the 50-day SMA near 159.50, with deeper support at 157.90, where the rising trendline aligns with horizontal support.