Causes that will have an effects on XAUUSD (GOLD)
- Gold price retreated during the North American session on Thursday after hitting a daily high of $2,326. The Federal Reserve projects just one interest rate cut instead of the three proposed since December’s 2023 Summary of Economic Projections
- Following a down day on Thursday, Gold price is licking its wounds early Friday, as the US Dollar buyers hold onto the recovery induced by the hawkish US Federal Reserve (Fed) policy decision announced on Wednesday.
- Fed held policy rates steady in the range of the range of 5.25%-5.50%, following the June policy meeting on Wednesday. The revised Summary of Economic Projections, the so called dot-plot, indicated the policymakers expect to cut rates only once in 2024, against a projection of three rate cuts in the March forecasts and down from two rate cuts widely anticipated.
- Additionally, record close for the US S&P 500 and Nasdaq indices for the fourth day in a row reduced the attractiveness of the US Treasury bond yields as an alternative higher-yielding asset. However, the US Dollar strength offset the impact of negative Treasury bond yields on Gold price, sending the yellow metal lower.
- Soft US Producer Price Index (PPI) data also failed to deter US Dollar buyers. The PPI for final demand unexpectedly dropped 0.2% last month after advancing by an unrevised 0.5% in April, the Labor Department’s Bureau of Labor Statistics said on Thursday. The market forecast was for a monthly increase of 0.1% in the reported period.
Weekly Gold Forecast Direction : Sideways Down
- Silver should be scared of a slowdown It is becoming increasingly difficult for Gold to compete on yield
- Recession in Europe and persisting problems in China’s property sector to heavily impact iron ore demand
- While inflation refuses to go away, gold refuses to go up
- FOMC Minutes don’t offer any hope for gold
- Strong dollar weighs on gold
- Demand for gold as insurance against inflation promises to decline
XAU/USD Technical Overview
The short-term technical outlook for Gold remains more or less the same, as the Gold price continues to wave in a narrow range, with the upside capped by the confluence of the 21-day Simple Moving Average (SMA) and the 50-day SMA near $2,350. On the other hand, the downside appears guarded by the May 3 low of $2,277.
The immediate support is now seen at the $2,300 threshold, below which the June 10 low of $2,287 will come into play,
A sustained break below the latter will retest the May 3 low of $2,277, as sellers aim for the $2,250 psychological barrier. Alternatively, any rebound in Gold price will need acceptance above key confluence support-turned-resistance near $2,350, where the 21-day and 50-day SMAs merge. Gold buyers will then flex their muscles toward the May 24 high of $2,364 on their way to the June 7 high of $2,388.
Technical View
1st Support Line 2290 1st Resistance Line 2328
2nd Support Line 2280 2nd Resistance Line 2338
Note: The above information may be inaccurate. Investors should not use this as a basis for deciding to place a trade.